Correlation Between Abbott Laboratories and Bone Biologics

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

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

Diversification Opportunities for Abbott Laboratories and Bone Biologics

-0.24

Correlation Coefficient

Abbott Laboratories  Bone Biologics

Very good diversification

The 3 months correlation between Abbott and Bone is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Abbott Laboratories and Bone Biologics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bone Biologics Corp and Abbott Laboratories 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 Abbott Laboratories are associated (or correlated) with Bone Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bone Biologics Corp has no effect on the direction of Abbott Laboratories i.e., Abbott Laboratories and Bone Biologics go up and down completely randomly.

Pair Corralation between Abbott Laboratories and Bone Biologics

Considering the 90-day investment horizon Abbott Laboratories is expected to generate 0.3 times more return on investment than Bone Biologics. However, Abbott Laboratories is 3.29 times less risky than Bone Biologics. It trades about 0.12 of its potential returns per unit of risk. Bone Biologics Corp is currently generating about -0.01 per unit of risk. If you would invest  11,439  in Abbott Laboratories on December 27, 2024 and sell it today you would earn a total of  1,222  from holding Abbott Laboratories or generate 10.68% return on investment over 90 days.

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

Abbott Laboratories  vs.  Bone Biologics Corp

Abbott Laboratories

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Abbott Laboratories are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental drivers, Abbott Laboratories may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Bone Biologics Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bone Biologics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Bone Biologics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Abbott Laboratories and Bone Biologics

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

The idea behind Abbott Laboratories and Bone Biologics Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.