Correlation Between Interpace Diag and Chembio Diagnostics

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

Diversification Opportunities for Interpace Diag and Chembio Diagnostics

0.41
  Correlation Coefficient

Very weak diversification

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

Pair Corralation between Interpace Diag and Chembio Diagnostics

If you would invest  0.00  in Chembio Diagnostics on July 1, 2022 and sell it today you would earn a total of  0.00  from holding Chembio Diagnostics or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy0.0%
ValuesDaily Returns

Interpace Diag Group  vs.  Chembio Diagnostics

 Performance (%) 
       Timeline  
Interpace Diag Group 
Interpace Performance
0 of 100
Over the last 90 days Interpace Diag Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in October 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Chembio Diagnostics 
Chembio Performance
0 of 100
Over the last 90 days Chembio Diagnostics 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 primary indicators remain nearly stable which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Interpace Diag and Chembio Diagnostics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Interpace Diag and Chembio Diagnostics

The main advantage of trading using opposite Interpace Diag and Chembio Diagnostics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interpace Diag position performs unexpectedly, Chembio Diagnostics 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 Chembio Diagnostics will offset losses from the drop in Chembio Diagnostics' long position.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Interpace Diag as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Interpace Diag's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Interpace Diag's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Interpace Diag Group.
The idea behind Interpace Diag Group and Chembio Diagnostics 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.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Chembio Diagnostics as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Chembio Diagnostics' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Chembio Diagnostics' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Chembio Diagnostics.
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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