Correlation Between Durect and NeoGenomics

Can any of the company-specific risk be diversified away by investing in both Durect and NeoGenomics 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 Durect and NeoGenomics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Durect and NeoGenomics, you can compare the effects of market volatilities on Durect and NeoGenomics 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 Durect with a short position of NeoGenomics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Durect and NeoGenomics.

Diversification Opportunities for Durect and NeoGenomics

-0.67

Correlation Coefficient

Durect  NeoGenomics

Excellent diversification

The 3 months correlation between Durect and NeoGenomics is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Durect and NeoGenomics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeoGenomics and Durect 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 Durect are associated (or correlated) with NeoGenomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeoGenomics has no effect on the direction of Durect i.e., Durect and NeoGenomics go up and down completely randomly.

Pair Corralation between Durect and NeoGenomics

Given the investment horizon of 90 days Durect is expected to generate 0.81 times more return on investment than NeoGenomics. However, Durect is 1.24 times less risky than NeoGenomics. It trades about -0.07 of its potential returns per unit of risk. NeoGenomics is currently generating about -0.08 per unit of risk. If you would invest  93.00  in Durect on October 23, 2024 and sell it today you would lose (9.09) from holding Durect or give up 9.77% of portfolio value over 90 days.

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

Durect  vs.  NeoGenomics

Durect

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Durect has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

NeoGenomics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NeoGenomics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, NeoGenomics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Durect and NeoGenomics

The main advantage of trading using opposite Durect and NeoGenomics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Durect position performs unexpectedly, NeoGenomics 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 NeoGenomics will offset losses from the drop in NeoGenomics' long position.

The idea behind Durect and NeoGenomics 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.