Correlation Between Psychemedics and HTG Molecular

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

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

Diversification Opportunities for Psychemedics and HTG Molecular

0.0

Correlation Coefficient

Psychemedics  HTG Molecular

Pay attention - limited upside

The 3 months correlation between Psychemedics and HTG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Psychemedics and HTG Molecular Diagnostics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HTG Molecular Diagnostics and Psychemedics 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 Psychemedics are associated (or correlated) with HTG Molecular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HTG Molecular Diagnostics has no effect on the direction of Psychemedics i.e., Psychemedics and HTG Molecular go up and down completely randomly.

Pair Corralation between Psychemedics and HTG Molecular

If you would invest (100.00) in HTG Molecular Diagnostics on December 29, 2024 and sell it today you would earn a total of  100.00  from holding HTG Molecular Diagnostics or generate -100.0% return on investment over 90 days.

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

Psychemedics  vs.  HTG Molecular Diagnostics

Psychemedics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Psychemedics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Psychemedics is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

HTG Molecular Diagnostics

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Psychemedics and HTG Molecular

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

The idea behind Psychemedics and HTG Molecular Diagnostics 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.