Correlation Between Neogen and BAXALTA

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

By analyzing existing cross correlation between Neogen and BAXALTA INC 4, you can compare the effects of market volatilities on Neogen and BAXALTA 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 BAXALTA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neogen and BAXALTA.

Diversification Opportunities for Neogen and BAXALTA

-0.48

Correlation Coefficient

Neogen  BAXALTA

Very good diversification

The 3 months correlation between Neogen and BAXALTA is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Neogen and BAXALTA INC 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAXALTA INC 4 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 BAXALTA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAXALTA INC 4 has no effect on the direction of Neogen i.e., Neogen and BAXALTA go up and down completely randomly.

Pair Corralation between Neogen and BAXALTA

Given the investment horizon of 90 days Neogen is expected to under-perform the BAXALTA. In addition to that, Neogen is 36.91 times more volatile than BAXALTA INC 4. It trades about -0.2 of its total potential returns per unit of risk. BAXALTA INC 4 is currently generating about -0.03 per unit of volatility. If you would invest  9,955  in BAXALTA INC 4 on December 29, 2024 and sell it today you would lose (12.00) from holding BAXALTA INC 4 or give up 0.12% of portfolio value over 90 days.

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

Neogen  vs.  BAXALTA INC 4

Neogen

Risk-Adjusted Performance

Very Weak

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

BAXALTA INC 4

Risk-Adjusted Performance

Very Weak

Over the last 90 days BAXALTA INC 4 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BAXALTA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Neogen and BAXALTA

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

The idea behind Neogen and BAXALTA INC 4 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 Transaction History module to view history of all your transactions and understand their impact on performance.