Correlation Between Fulgent Genetics and T2 Biosystems

Can any of the company-specific risk be diversified away by investing in both Fulgent Genetics and T2 Biosystems 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 T2 Biosystems into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fulgent Genetics and T2 Biosystems, you can compare the effects of market volatilities on Fulgent Genetics and T2 Biosystems 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 T2 Biosystems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fulgent Genetics and T2 Biosystems.

Diversification Opportunities for Fulgent Genetics and T2 Biosystems

0.65

Correlation Coefficient

Fulgent Genetics  T2 Biosystems

Poor diversification

The 3 months correlation between Fulgent and TTOO is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fulgent Genetics and T2 Biosystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T2 Biosystems 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 T2 Biosystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T2 Biosystems has no effect on the direction of Fulgent Genetics i.e., Fulgent Genetics and T2 Biosystems go up and down completely randomly.

Pair Corralation between Fulgent Genetics and T2 Biosystems

If you would invest  0.00  in T2 Biosystems on December 20, 2024 and sell it today you would earn a total of  0.00  from holding T2 Biosystems or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.67%
Values	Daily Returns

Fulgent Genetics  vs.  T2 Biosystems

Fulgent Genetics

Risk-Adjusted Performance

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 weak 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.

T2 Biosystems

Risk-Adjusted Performance

Very Weak

Over the last 90 days T2 Biosystems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, T2 Biosystems is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fulgent Genetics and T2 Biosystems

The main advantage of trading using opposite Fulgent Genetics and T2 Biosystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fulgent Genetics position performs unexpectedly, T2 Biosystems 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 T2 Biosystems will offset losses from the drop in T2 Biosystems' long position.

The idea behind Fulgent Genetics and T2 Biosystems 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.