Correlation Between Laboratory and DermTech

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Laboratory and DermTech 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 Laboratory and DermTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laboratory and DermTech, you can compare the effects of market volatilities on Laboratory and DermTech 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 Laboratory with a short position of DermTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laboratory and DermTech.

Diversification Opportunities for Laboratory and DermTech

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Laboratory and DermTech is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory Of and DermTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DermTech and Laboratory 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 Laboratory are associated (or correlated) with DermTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DermTech has no effect on the direction of Laboratory i.e., Laboratory and DermTech go up and down completely randomly.

Pair Corralation between Laboratory and DermTech

Allowing for the 90-day total investment horizon Laboratory is expected to generate 0.12 times more return on investment than DermTech. However, Laboratory is 8.02 times less risky than DermTech. It trades about 0.08 of its potential returns per unit of risk. DermTech is currently generating about -0.32 per unit of risk. If you would invest  21,480  in Laboratory on December 30, 2023 and sell it today you would earn a total of  366.00  from holding Laboratory or generate 1.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Laboratory Of  vs.  DermTech

 Performance 
       Timeline  
Laboratory 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Laboratory has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Laboratory is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.
DermTech 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days DermTech 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 basic indicators remain quite persistent which may send shares a bit higher in April 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Laboratory and DermTech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Laboratory and DermTech

The main advantage of trading using opposite Laboratory and DermTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laboratory position performs unexpectedly, DermTech 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 DermTech will offset losses from the drop in DermTech's long position.
The idea behind Laboratory and DermTech 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

Other Complementary Tools

Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Fundamental Analysis
View fundamental data based on most recent published financial statements
Stocks Directory
Find actively traded stocks across global markets
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Share Portfolio
Track or share privately all of your investments from the convenience of any device
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings