Correlation Between Bone Biologics and Biomerica

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

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

Diversification Opportunities for Bone Biologics and Biomerica

0.1

Correlation Coefficient

Bone Biologics  Biomerica

Average diversification

The 3 months correlation between Bone and Biomerica is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Bone Biologics Corp and Biomerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomerica and Bone Biologics 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 Bone Biologics Corp are associated (or correlated) with Biomerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomerica has no effect on the direction of Bone Biologics i.e., Bone Biologics and Biomerica go up and down completely randomly.

Pair Corralation between Bone Biologics and Biomerica

Given the investment horizon of 90 days Bone Biologics Corp is expected to under-perform the Biomerica. But the stock apears to be less risky and, when comparing its historical volatility, Bone Biologics Corp is 2.01 times less risky than Biomerica. The stock trades about -0.31 of its potential returns per unit of risk. The Biomerica is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  37.00  in Biomerica on October 5, 2024 and sell it today you would lose (7.00) from holding Biomerica or give up 18.92% of portfolio value over 90 days.

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

Bone Biologics Corp  vs.  Biomerica

Bone Biologics Corp

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Biomerica

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Biomerica are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Biomerica may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bone Biologics and Biomerica

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

The idea behind Bone Biologics Corp and Biomerica 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.