Correlation Between Fulgent Genetics and CareCloud

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

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

Diversification Opportunities for Fulgent Genetics and CareCloud

-0.7

Correlation Coefficient

Fulgent Genetics  CareCloud

Excellent diversification

The 3 months correlation between Fulgent and CareCloud is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Fulgent Genetics and CareCloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareCloud and Fulgent Genetics 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 Fulgent Genetics are associated (or correlated) with CareCloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareCloud has no effect on the direction of Fulgent Genetics i.e., Fulgent Genetics and CareCloud go up and down completely randomly.

Pair Corralation between Fulgent Genetics and CareCloud

Given the investment horizon of 90 days Fulgent Genetics is expected to under-perform the CareCloud. But the stock apears to be less risky and, when comparing its historical volatility, Fulgent Genetics is 1.6 times less risky than CareCloud. The stock trades about -0.05 of its potential returns per unit of risk. The CareCloud is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,103  in CareCloud on September 5, 2024 and sell it today you would earn a total of  563.00  from holding CareCloud or generate 51.04% return on investment over 90 days.

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

Fulgent Genetics  vs.  CareCloud

Fulgent Genetics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fulgent Genetics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

CareCloud

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CareCloud are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, CareCloud reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fulgent Genetics and CareCloud

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

The idea behind Fulgent Genetics and CareCloud 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.