Correlation Between Biodesix and MDxHealth

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

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

Diversification Opportunities for Biodesix and MDxHealth

0.67

Correlation Coefficient

Biodesix  MDxHealth

Poor diversification

The 3 months correlation between Biodesix and MDxHealth is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Biodesix and MDxHealth SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDxHealth SA ADR and Biodesix 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 Biodesix are associated (or correlated) with MDxHealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDxHealth SA ADR has no effect on the direction of Biodesix i.e., Biodesix and MDxHealth go up and down completely randomly.

Pair Corralation between Biodesix and MDxHealth

Given the investment horizon of 90 days Biodesix is expected to under-perform the MDxHealth. In addition to that, Biodesix is 1.42 times more volatile than MDxHealth SA ADR. It trades about -0.18 of its total potential returns per unit of risk. MDxHealth SA ADR is currently generating about -0.03 per unit of volatility. If you would invest  200.00  in MDxHealth SA ADR on November 29, 2024 and sell it today you would lose (17.00) from holding MDxHealth SA ADR or give up 8.5% of portfolio value over 90 days.

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

Biodesix  vs.  MDxHealth SA ADR

Biodesix

Risk-Adjusted Performance

Very Weak

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

MDxHealth SA ADR

Risk-Adjusted Performance

Weak

Over the last 90 days MDxHealth SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, MDxHealth is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Biodesix and MDxHealth

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

The idea behind Biodesix and MDxHealth SA ADR 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.