Correlation Between Aurora Spine and Bone Biologics

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

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

Diversification Opportunities for Aurora Spine and Bone Biologics

-0.43

Correlation Coefficient

Aurora Spine  Bone Biologics

Very good diversification

The 3 months correlation between Aurora and Bone is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Spine 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 Aurora Spine 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 Aurora Spine 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 Aurora Spine i.e., Aurora Spine and Bone Biologics go up and down completely randomly.

Pair Corralation between Aurora Spine and Bone Biologics

Assuming the 90 days horizon Aurora Spine is expected to generate 11.32 times less return on investment than Bone Biologics. But when comparing it to its historical volatility, Aurora Spine is 2.88 times less risky than Bone Biologics. It trades about 0.13 of its potential returns per unit of risk. Bone Biologics Corp is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest  1,515  in Bone Biologics Corp on December 28, 2024 and sell it today you would earn a total of  505.00  from holding Bone Biologics Corp or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	18.18%
Values	Daily Returns

Aurora Spine  vs.  Bone Biologics Corp

Aurora Spine

Risk-Adjusted Performance

Very Weak

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

Bone Biologics Corp

Risk-Adjusted Performance

Insignificant

Over the last 90 days Bone Biologics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly fragile technical and fundamental indicators, Bone Biologics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurora Spine and Bone Biologics

The main advantage of trading using opposite Aurora Spine and Bone Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Spine 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 Aurora Spine 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.