Correlation Between MDxHealth and Inotiv

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

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

Diversification Opportunities for MDxHealth and Inotiv

0.86

Correlation Coefficient

MDxHealth  Inotiv

Very poor diversification

The 3 months correlation between MDxHealth and Inotiv is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding MDxHealth SA ADR and Inotiv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inotiv Inc and MDxHealth 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 MDxHealth SA ADR are associated (or correlated) with Inotiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inotiv Inc has no effect on the direction of MDxHealth i.e., MDxHealth and Inotiv go up and down completely randomly.

Pair Corralation between MDxHealth and Inotiv

Given the investment horizon of 90 days MDxHealth SA ADR is expected to generate 0.42 times more return on investment than Inotiv. However, MDxHealth SA ADR is 2.36 times less risky than Inotiv. It trades about -0.22 of its potential returns per unit of risk. Inotiv Inc is currently generating about -0.12 per unit of risk. 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	Strong
Accuracy	100.0%
Values	Daily Returns

MDxHealth SA ADR  vs.  Inotiv Inc

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.

Inotiv Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inotiv Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with MDxHealth and Inotiv

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

The idea behind MDxHealth SA ADR and Inotiv Inc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.