Correlation Between Neogen and Biodesix

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

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

Diversification Opportunities for Neogen and Biodesix

0.24

Correlation Coefficient

Neogen  Biodesix

Modest diversification

The 3 months correlation between Neogen and Biodesix is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Neogen and Biodesix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biodesix and Neogen 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 Neogen are associated (or correlated) with Biodesix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biodesix has no effect on the direction of Neogen i.e., Neogen and Biodesix go up and down completely randomly.

Pair Corralation between Neogen and Biodesix

Given the investment horizon of 90 days Neogen is expected to under-perform the Biodesix. But the stock apears to be less risky and, when comparing its historical volatility, Neogen is 1.73 times less risky than Biodesix. The stock trades about -0.15 of its potential returns per unit of risk. The Biodesix is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  135.00  in Biodesix on October 5, 2024 and sell it today you would earn a total of  13.00  from holding Biodesix or generate 9.63% return on investment over 90 days.

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

Neogen  vs.  Biodesix

Neogen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neogen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Biodesix

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Neogen and Biodesix

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

The idea behind Neogen and Biodesix 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.