Correlation Between BiodesixInc and Opko Health

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

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

Diversification Opportunities for BiodesixInc and Opko Health

-0.41

Correlation Coefficient

BiodesixInc  Opko Health

Very good diversification

The 3 months correlation between BiodesixInc and Opko is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding BiodesixInc and Opko Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opko Health and BiodesixInc 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 BiodesixInc are associated (or correlated) with Opko Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opko Health has no effect on the direction of BiodesixInc i.e., BiodesixInc and Opko Health go up and down completely randomly.

Pair Corralation between BiodesixInc and Opko Health

Given the investment horizon of 90 days BiodesixInc is expected to generate 1.46 times more return on investment than Opko Health. However, BiodesixInc is 1.46 times more volatile than Opko Health. It trades about 0.02 of its potential returns per unit of risk. Opko Health is currently generating about -0.01 per unit of risk. If you would invest  151.00  in BiodesixInc on January 31, 2024 and sell it today you would lose (29.00) from holding BiodesixInc or give up 19.21% of portfolio value over 90 days.

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

BiodesixInc  vs.  Opko Health

BiodesixInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BiodesixInc 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 basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Opko Health

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Opko Health are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Opko Health disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BiodesixInc and Opko Health

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

The idea behind BiodesixInc and Opko Health 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 CEOs Directory module to screen CEOs from public companies around the world.