Correlation Between Fulgent Genetics and Caredx

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

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

Diversification Opportunities for Fulgent Genetics and Caredx

0.54

Correlation Coefficient

Fulgent Genetics  Caredx

Very weak diversification

The 3 months correlation between Fulgent and Caredx is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Fulgent Genetics and Caredx Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caredx Inc and Fulgent Genetics 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 Fulgent Genetics are associated (or correlated) with Caredx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caredx Inc has no effect on the direction of Fulgent Genetics i.e., Fulgent Genetics and Caredx go up and down completely randomly.

Pair Corralation between Fulgent Genetics and Caredx

Given the investment horizon of 90 days Fulgent Genetics is expected to generate 0.78 times more return on investment than Caredx. However, Fulgent Genetics is 1.29 times less risky than Caredx. It trades about -0.04 of its potential returns per unit of risk. Caredx Inc is currently generating about -0.07 per unit of risk. If you would invest  2,235  in Fulgent Genetics on September 13, 2024 and sell it today you would lose (214.00) from holding Fulgent Genetics or give up 9.57% of portfolio value over 90 days.

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

Fulgent Genetics  vs.  Caredx Inc

Fulgent Genetics

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 inconsistent 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.

Pair Trading with Fulgent Genetics and Caredx

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

The idea behind Fulgent Genetics and Caredx 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.