Correlation Between Guardant Health and Biodesix

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

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

Diversification Opportunities for Guardant Health and Biodesix

-0.14

Correlation Coefficient

Guardant Health  Biodesix

Good diversification

The 3 months correlation between Guardant and Biodesix is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health and Biodesix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biodesix and Guardant Health 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 Guardant Health are associated (or correlated) with Biodesix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biodesix has no effect on the direction of Guardant Health i.e., Guardant Health and Biodesix go up and down completely randomly.

Pair Corralation between Guardant Health and Biodesix

Allowing for the 90-day total investment horizon Guardant Health is expected to under-perform the Biodesix. In addition to that, Guardant Health is 1.22 times more volatile than Biodesix. It trades about -0.18 of its total potential returns per unit of risk. Biodesix is currently generating about 0.01 per unit of volatility. If you would invest  163.00  in Biodesix on July 24, 2024 and sell it today you would lose (2.00) from holding Biodesix or give up 1.23% of portfolio value over 90 days.

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

Guardant Health  vs.  Biodesix

Guardant Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guardant Health 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 technical indicators remain fairly strong which may send shares a bit higher in November 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Biodesix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biodesix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Biodesix is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guardant Health and Biodesix

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

The idea behind Guardant Health and Biodesix 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.