Correlation Between Olink Holding and Neogen

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

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

Diversification Opportunities for Olink Holding and Neogen

0.06

Correlation Coefficient

Olink Holding  Neogen

Significant diversification

The 3 months correlation between Olink and Neogen is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Olink Holding AB and Neogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogen and Olink Holding 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 Olink Holding AB 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 Olink Holding i.e., Olink Holding and Neogen go up and down completely randomly.

Pair Corralation between Olink Holding and Neogen

Considering the 90-day investment horizon Olink Holding AB is expected to generate 1.78 times more return on investment than Neogen. However, Olink Holding is 1.78 times more volatile than Neogen. It trades about 0.02 of its potential returns per unit of risk. Neogen is currently generating about -0.01 per unit of risk. If you would invest  2,383  in Olink Holding AB on February 23, 2024 and sell it today you would earn a total of  16.00  from holding Olink Holding AB or generate 0.67% return on investment over 90 days.

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

Olink Holding AB  vs.  Neogen

Olink Holding AB

Risk-Adjusted Performance

11 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Olink Holding AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Olink Holding may actually be approaching a critical reversion point that can send shares even higher in June 2024.

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 conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Olink Holding and Neogen

The main advantage of trading using opposite Olink Holding and Neogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olink Holding 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 Olink Holding AB 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.