Correlation Between Marchex and Biodexa Pharmaceticals

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

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

Diversification Opportunities for Marchex and Biodexa Pharmaceticals

-0.26

Correlation Coefficient

Marchex  Biodexa Pharmaceticals

Very good diversification

The 3 months correlation between Marchex and Biodexa is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Marchex and Biodexa Pharmaceticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biodexa Pharmaceticals and Marchex 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 Marchex are associated (or correlated) with Biodexa Pharmaceticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biodexa Pharmaceticals has no effect on the direction of Marchex i.e., Marchex and Biodexa Pharmaceticals go up and down completely randomly.

Pair Corralation between Marchex and Biodexa Pharmaceticals

Given the investment horizon of 90 days Marchex is expected to generate 0.51 times more return on investment than Biodexa Pharmaceticals. However, Marchex is 1.95 times less risky than Biodexa Pharmaceticals. It trades about 0.04 of its potential returns per unit of risk. Biodexa Pharmaceticals is currently generating about -0.11 per unit of risk. If you would invest  185.00  in Marchex on December 5, 2024 and sell it today you would earn a total of  10.00  from holding Marchex or generate 5.41% return on investment over 90 days.

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

Marchex  vs.  Biodexa Pharmaceticals

Marchex

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marchex are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical indicators, Marchex may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Biodexa Pharmaceticals

Risk-Adjusted Performance

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 fragile 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 current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Marchex and Biodexa Pharmaceticals

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

The idea behind Marchex and Biodexa Pharmaceticals 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.