Correlation Between Caredx and DarioHealth Corp

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

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

Diversification Opportunities for Caredx and DarioHealth Corp

0.6

Correlation Coefficient

Caredx  DarioHealth Corp

Poor diversification

The 3 months correlation between Caredx and DarioHealth is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Caredx Inc and DarioHealth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DarioHealth Corp and Caredx 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 Caredx Inc are associated (or correlated) with DarioHealth Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DarioHealth Corp has no effect on the direction of Caredx i.e., Caredx and DarioHealth Corp go up and down completely randomly.

Pair Corralation between Caredx and DarioHealth Corp

Given the investment horizon of 90 days Caredx Inc is expected to under-perform the DarioHealth Corp. But the stock apears to be less risky and, when comparing its historical volatility, Caredx Inc is 2.45 times less risky than DarioHealth Corp. The stock trades about -0.24 of its potential returns per unit of risk. The DarioHealth Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  67.00  in DarioHealth Corp on September 27, 2024 and sell it today you would earn a total of  2.00  from holding DarioHealth Corp or generate 2.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Caredx Inc  vs.  DarioHealth Corp

Caredx Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caredx Inc 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 somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

DarioHealth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Caredx and DarioHealth Corp

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

The idea behind Caredx Inc and DarioHealth Corp 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.