Correlation Between Aurora Spine and Tenon Medical

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

By analyzing existing cross correlation between Aurora Spine and Tenon Medical, you can compare the effects of market volatilities on Aurora Spine and Tenon Medical 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 Tenon Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Spine and Tenon Medical.

Diversification Opportunities for Aurora Spine and Tenon Medical

0.48

Correlation Coefficient

Aurora Spine  Tenon Medical

Very weak diversification

The 3 months correlation between Aurora and Tenon is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Spine and Tenon Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenon Medical 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 Tenon Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenon Medical has no effect on the direction of Aurora Spine i.e., Aurora Spine and Tenon Medical go up and down completely randomly.

Pair Corralation between Aurora Spine and Tenon Medical

Assuming the 90 days horizon Aurora Spine is expected to under-perform the Tenon Medical. But the otc stock apears to be less risky and, when comparing its historical volatility, Aurora Spine is 7.53 times less risky than Tenon Medical. The otc stock trades about 0.0 of its potential returns per unit of risk. The Tenon Medical is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  191.00  in Tenon Medical on December 28, 2024 and sell it today you would earn a total of  56.00  from holding Tenon Medical or generate 29.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Aurora Spine  vs.  Tenon Medical

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.

Tenon Medical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tenon Medical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Tenon Medical displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurora Spine and Tenon Medical

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

The idea behind Aurora Spine and Tenon Medical 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.