Correlation Between Biodexa Pharmaceticals and Cardio Diagnostics

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

By analyzing existing cross correlation between Biodexa Pharmaceticals and Cardio Diagnostics Holdings, you can compare the effects of market volatilities on Biodexa Pharmaceticals and Cardio 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 Biodexa Pharmaceticals with a short position of Cardio Diagnostics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biodexa Pharmaceticals and Cardio Diagnostics.

Diversification Opportunities for Biodexa Pharmaceticals and Cardio Diagnostics

0.39

Correlation Coefficient

Biodexa Pharmaceticals  Cardio Diagnostics

Weak diversification

The 3 months correlation between Biodexa and Cardio is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Biodexa Pharmaceticals and Cardio Diagnostics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardio Diagnostics and Biodexa Pharmaceticals 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 Biodexa Pharmaceticals are associated (or correlated) with Cardio Diagnostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardio Diagnostics has no effect on the direction of Biodexa Pharmaceticals i.e., Biodexa Pharmaceticals and Cardio Diagnostics go up and down completely randomly.

Pair Corralation between Biodexa Pharmaceticals and Cardio Diagnostics

Given the investment horizon of 90 days Biodexa Pharmaceticals is expected to under-perform the Cardio Diagnostics. In addition to that, Biodexa Pharmaceticals is 1.25 times more volatile than Cardio Diagnostics Holdings. It trades about -0.04 of its total potential returns per unit of risk. Cardio Diagnostics Holdings is currently generating about 0.03 per unit of volatility. If you would invest  33.00  in Cardio Diagnostics Holdings on September 3, 2024 and sell it today you would lose (3.00) from holding Cardio Diagnostics Holdings or give up 9.09% of portfolio value over 90 days.

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

Biodexa Pharmaceticals  vs.  Cardio Diagnostics Holdings

Biodexa Pharmaceticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biodexa Pharmaceticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Cardio Diagnostics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cardio Diagnostics Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Cardio Diagnostics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Biodexa Pharmaceticals and Cardio Diagnostics

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

The idea behind Biodexa Pharmaceticals and Cardio Diagnostics Holdings 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.