Correlation Between BAXALTA and Neogen

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

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

Diversification Opportunities for BAXALTA and Neogen

-0.48

Correlation Coefficient

BAXALTA  Neogen

Very good diversification

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

Pair Corralation between BAXALTA and Neogen

Assuming the 90 days trading horizon BAXALTA INC 4 is expected to generate 0.03 times more return on investment than Neogen. However, BAXALTA INC 4 is 36.91 times less risky than Neogen. It trades about -0.03 of its potential returns per unit of risk. Neogen is currently generating about -0.2 per unit of risk. 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

BAXALTA INC 4  vs.  Neogen

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.

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.

Pair Trading with BAXALTA and Neogen

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

The idea behind BAXALTA INC 4 and Neogen 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.