Correlation Between Sera Prognostics and Inotiv

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

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

Diversification Opportunities for Sera Prognostics and Inotiv

-0.52

Correlation Coefficient

Sera Prognostics  Inotiv

Excellent diversification

The 3 months correlation between Sera and Inotiv is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sera Prognostics and Inotiv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inotiv Inc and Sera Prognostics 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 Sera Prognostics are associated (or correlated) with Inotiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inotiv Inc has no effect on the direction of Sera Prognostics i.e., Sera Prognostics and Inotiv go up and down completely randomly.

Pair Corralation between Sera Prognostics and Inotiv

Given the investment horizon of 90 days Sera Prognostics is expected to generate 41.63 times less return on investment than Inotiv. But when comparing it to its historical volatility, Sera Prognostics is 1.38 times less risky than Inotiv. It trades about 0.01 of its potential returns per unit of risk. Inotiv Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  146.00  in Inotiv Inc on September 2, 2024 and sell it today you would earn a total of  220.00  from holding Inotiv Inc or generate 150.68% return on investment over 90 days.

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

Sera Prognostics  vs.  Inotiv Inc

Sera Prognostics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Inotiv Inc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Inotiv Inc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Inotiv showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sera Prognostics and Inotiv

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

The idea behind Sera Prognostics and Inotiv Inc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.