Correlation Between Fonar and Caredx

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

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

Diversification Opportunities for Fonar and Caredx

-0.44

Correlation Coefficient

Fonar  Caredx

Very good diversification

The 3 months correlation between Fonar and Caredx is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Fonar and Caredx Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caredx Inc and Fonar 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 Fonar 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 Fonar i.e., Fonar and Caredx go up and down completely randomly.

Pair Corralation between Fonar and Caredx

Given the investment horizon of 90 days Fonar is expected to under-perform the Caredx. But the stock apears to be less risky and, when comparing its historical volatility, Fonar is 3.05 times less risky than Caredx. The stock trades about -0.15 of its potential returns per unit of risk. The Caredx Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,842  in Caredx Inc on July 24, 2024 and sell it today you would earn a total of  472.00  from holding Caredx Inc or generate 25.62% return on investment over 90 days.

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

Fonar  vs.  Caredx Inc

Fonar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fonar has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in November 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Caredx Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caredx Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Caredx sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fonar and Caredx

The main advantage of trading using opposite Fonar and Caredx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fonar 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 Fonar 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.