Correlation Between Guardant Health and Trinity Biotech

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

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

Diversification Opportunities for Guardant Health and Trinity Biotech

-0.22

Correlation Coefficient

Guardant Health  Trinity Biotech

Very good diversification

The 3 months correlation between Guardant and Trinity is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health and Trinity Biotech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinity Biotech plc and Guardant Health 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 Guardant Health are associated (or correlated) with Trinity Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinity Biotech plc has no effect on the direction of Guardant Health i.e., Guardant Health and Trinity Biotech go up and down completely randomly.

Pair Corralation between Guardant Health and Trinity Biotech

Allowing for the 90-day total investment horizon Guardant Health is expected to generate 0.36 times more return on investment than Trinity Biotech. However, Guardant Health is 2.75 times less risky than Trinity Biotech. It trades about 0.09 of its potential returns per unit of risk. Trinity Biotech plc is currently generating about -0.01 per unit of risk. If you would invest  3,578  in Guardant Health on December 3, 2024 and sell it today you would earn a total of  677.00  from holding Guardant Health or generate 18.92% return on investment over 90 days.

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

Guardant Health  vs.  Trinity Biotech plc

Guardant Health

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guardant Health are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Guardant Health demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Trinity Biotech plc

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Guardant Health and Trinity Biotech

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

The idea behind Guardant Health and Trinity Biotech plc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.