Correlation Between BioLife Solutions and Caredx

Can any of the company-specific risk be diversified away by investing in both BioLife Solutions and Caredx at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BioLife Solutions and Caredx into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BioLife Solutions and Caredx Inc, you can compare the effects of market volatilities on BioLife Solutions and Caredx and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BioLife Solutions with a short position of Caredx. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioLife Solutions and Caredx.

Diversification Opportunities for BioLife Solutions and Caredx

0.07

Correlation Coefficient

BioLife Solutions  Caredx

Significant diversification

The 3 months correlation between BioLife and Caredx is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding BioLife Solutions and Caredx Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caredx Inc and BioLife Solutions is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BioLife Solutions are associated (or correlated) with Caredx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caredx Inc has no effect on the direction of BioLife Solutions i.e., BioLife Solutions and Caredx go up and down completely randomly.

Pair Corralation between BioLife Solutions and Caredx

Given the investment horizon of 90 days BioLife Solutions is expected to generate 1.91 times less return on investment than Caredx. But when comparing it to its historical volatility, BioLife Solutions is 1.23 times less risky than Caredx. It trades about 0.08 of its potential returns per unit of risk. Caredx Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,521  in Caredx Inc on September 5, 2024 and sell it today you would earn a total of  1,071  from holding Caredx Inc or generate 70.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BioLife Solutions  vs.  Caredx Inc

BioLife Solutions

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BioLife Solutions are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, BioLife Solutions may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Caredx Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caredx Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Caredx is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BioLife Solutions and Caredx

The main advantage of trading using opposite BioLife Solutions and Caredx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioLife Solutions position performs unexpectedly, Caredx can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Caredx will offset losses from the drop in Caredx's long position.

The idea behind BioLife Solutions and Caredx Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the CEOs Directory module to screen CEOs from public companies around the world.