Correlation Between T2 Biosystms and Fulgent Genetics

Can any of the company-specific risk be diversified away by investing in both T2 Biosystms and Fulgent Genetics 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 T2 Biosystms and Fulgent Genetics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between T2 Biosystms and Fulgent Genetics, you can compare the effects of market volatilities on T2 Biosystms and Fulgent Genetics 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 T2 Biosystms with a short position of Fulgent Genetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of T2 Biosystms and Fulgent Genetics.

Diversification Opportunities for T2 Biosystms and Fulgent Genetics

0.84

Correlation Coefficient

T2 Biosystms  Fulgent Genetics

Very poor diversification

The 3 months correlation between TTOO and Fulgent is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding T2 Biosystms and Fulgent Genetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulgent Genetics and T2 Biosystms 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 T2 Biosystms are associated (or correlated) with Fulgent Genetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulgent Genetics has no effect on the direction of T2 Biosystms i.e., T2 Biosystms and Fulgent Genetics go up and down completely randomly.

Pair Corralation between T2 Biosystms and Fulgent Genetics

Given the investment horizon of 90 days T2 Biosystms is expected to generate 19.99 times more return on investment than Fulgent Genetics. However, T2 Biosystms is 19.99 times more volatile than Fulgent Genetics. It trades about 0.09 of its potential returns per unit of risk. Fulgent Genetics is currently generating about -0.19 per unit of risk. If you would invest  23.00  in T2 Biosystms on December 4, 2024 and sell it today you would lose (5.00) from holding T2 Biosystms or give up 21.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	71.43%
Values	Daily Returns

T2 Biosystms  vs.  Fulgent Genetics

T2 Biosystms

Risk-Adjusted Performance

Very Weak

Over the last 90 days T2 Biosystms has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Fulgent Genetics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fulgent Genetics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with T2 Biosystms and Fulgent Genetics

The main advantage of trading using opposite T2 Biosystms and Fulgent Genetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T2 Biosystms position performs unexpectedly, Fulgent Genetics 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 Fulgent Genetics will offset losses from the drop in Fulgent Genetics' long position.

The idea behind T2 Biosystms and Fulgent Genetics 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.