Correlation Between Emergent Biosolutions and MDxHealth

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

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

Diversification Opportunities for Emergent Biosolutions and MDxHealth

0.71

Correlation Coefficient

Emergent Biosolutions  MDxHealth

Poor diversification

The 3 months correlation between Emergent and MDxHealth is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Emergent Biosolutions 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 Emergent Biosolutions 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 Emergent Biosolutions 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 Emergent Biosolutions i.e., Emergent Biosolutions and MDxHealth go up and down completely randomly.

Pair Corralation between Emergent Biosolutions and MDxHealth

Considering the 90-day investment horizon Emergent Biosolutions is expected to under-perform the MDxHealth. In addition to that, Emergent Biosolutions is 1.49 times more volatile than MDxHealth SA ADR. It trades about -0.23 of its total potential returns per unit of risk. MDxHealth SA ADR is currently generating about -0.22 per unit of volatility. If you would invest  235.00  in MDxHealth SA ADR on December 30, 2024 and sell it today you would lose (84.00) from holding MDxHealth SA ADR or give up 35.74% of portfolio value over 90 days.

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

Emergent Biosolutions  vs.  MDxHealth SA ADR

Emergent Biosolutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Emergent Biosolutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

MDxHealth SA ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days MDxHealth SA ADR 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 basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Emergent Biosolutions and MDxHealth

The main advantage of trading using opposite Emergent Biosolutions and MDxHealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emergent Biosolutions 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 Emergent Biosolutions 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..