Correlation Between Cardio Diagnostics and Baudax Bio

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

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

Diversification Opportunities for Cardio Diagnostics and Baudax Bio

0.65

Correlation Coefficient

Cardio Diagnostics  Baudax Bio

Poor diversification

The 3 months correlation between Cardio and Baudax is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cardio Diagnostics Holdings and Baudax Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baudax Bio and Cardio Diagnostics 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 Cardio Diagnostics Holdings are associated (or correlated) with Baudax Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baudax Bio has no effect on the direction of Cardio Diagnostics i.e., Cardio Diagnostics and Baudax Bio go up and down completely randomly.

Pair Corralation between Cardio Diagnostics and Baudax Bio

If you would invest  33.00  in Cardio Diagnostics Holdings on September 1, 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	Significant
Accuracy	1.59%
Values	Daily Returns

Cardio Diagnostics Holdings  vs.  Baudax Bio

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.

Baudax Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baudax Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Baudax Bio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cardio Diagnostics and Baudax Bio

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

The idea behind Cardio Diagnostics Holdings and Baudax Bio 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.