Correlation Between Biocept and DermTech

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

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

Diversification Opportunities for Biocept and DermTech

0.9

Correlation Coefficient

Biocept  DermTech

Almost no diversification

The 3 months correlation between Biocept and DermTech is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Biocept and DermTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DermTech and Biocept 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 Biocept are associated (or correlated) with DermTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DermTech has no effect on the direction of Biocept i.e., Biocept and DermTech go up and down completely randomly.

Pair Corralation between Biocept and DermTech

If you would invest  3.65  in DermTech on September 27, 2024 and sell it today you would earn a total of  0.00  from holding DermTech or generate 0.0% return on investment over 90 days.

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

Biocept  vs.  DermTech

Biocept

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biocept has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Biocept is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

DermTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DermTech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, DermTech is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Biocept and DermTech

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

The idea behind Biocept and DermTech 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 Global Correlations module to find global opportunities by holding instruments from different markets.