Correlation Between Fulgent Genetics and Neogen

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

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

Diversification Opportunities for Fulgent Genetics and Neogen

0.67

Correlation Coefficient

Fulgent Genetics  Neogen

Poor diversification

The 24 months correlation between Fulgent and Neogen is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Fulgent Genetics and Neogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogen 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 Neogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neogen has no effect on the direction of Fulgent Genetics i.e., Fulgent Genetics and Neogen go up and down completely randomly.

Pair Corralation between Fulgent Genetics and Neogen

Given the investment horizon of 90 days Fulgent Genetics is expected to generate 2.72 times less return on investment than Neogen. But when comparing it to its historical volatility, Fulgent Genetics is 1.32 times less risky than Neogen. It trades about 0.1 of its potential returns per unit of risk. Neogen is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,231  in Neogen on February 23, 2024 and sell it today you would earn a total of  122.00  from holding Neogen or generate 9.91% return on investment over 90 days.

Time Period	24 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Fulgent Genetics  vs.  Neogen

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 unsteady 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.

Neogen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neogen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Neogen is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fulgent Genetics and Neogen

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

The idea behind Fulgent Genetics and Neogen 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 CEOs Directory module to screen CEOs from public companies around the world.