Correlation Between Applied Genetic and Cardinal Health

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

Diversification Opportunities for Applied Genetic and Cardinal Health

-0.5
  Correlation Coefficient

Very good diversification

The 3 months correlation between Applied and Cardinal is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Applied Genetic Tech and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Applied Genetic 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 Applied Genetic Tech are associated (or correlated) with Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Applied Genetic i.e., Applied Genetic and Cardinal Health go up and down completely randomly.

Pair Corralation between Applied Genetic and Cardinal Health

Given the investment horizon of 90 days Applied Genetic Tech is expected to under-perform the Cardinal Health. In addition to that, Applied Genetic is 3.21 times more volatile than Cardinal Health. It trades about -0.08 of its total potential returns per unit of risk. Cardinal Health is currently generating about 0.05 per unit of volatility. If you would invest  4,666  in Cardinal Health on July 8, 2022 and sell it today you would earn a total of  2,278  from holding Cardinal Health or generate 48.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Applied Genetic Tech  vs.  Cardinal Health

 Performance (%) 
       Timeline  
Applied Genetic Tech 
Applied Performance
0 of 100
Over the last 90 days Applied Genetic Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Applied Price Channel

Cardinal Health 
Cardinal Performance
21 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Cardinal Health reported solid returns over the last few months and may actually be approaching a breakup point.

Cardinal Price Channel

Applied Genetic and Cardinal Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Applied Genetic and Cardinal Health

The main advantage of trading using opposite Applied Genetic and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Genetic position performs unexpectedly, Cardinal 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 Cardinal Health will offset losses from the drop in Cardinal Health's long position.
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The idea behind Applied Genetic Tech and Cardinal 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.
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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