Correlation Between Bone Biologics and ZEN Graphene

Can any of the company-specific risk be diversified away by investing in both Bone Biologics and ZEN Graphene 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 ZEN Graphene 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 ZEN Graphene Solutions, you can compare the effects of market volatilities on Bone Biologics and ZEN Graphene 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 ZEN Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bone Biologics and ZEN Graphene.

Diversification Opportunities for Bone Biologics and ZEN Graphene

0.45

Correlation Coefficient

Bone Biologics  ZEN Graphene

Very weak diversification

The 3 months correlation between Bone and ZEN is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bone Biologics Corp and ZEN Graphene Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZEN Graphene Solutions 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 ZEN Graphene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZEN Graphene Solutions has no effect on the direction of Bone Biologics i.e., Bone Biologics and ZEN Graphene go up and down completely randomly.

Pair Corralation between Bone Biologics and ZEN Graphene

Given the investment horizon of 90 days Bone Biologics Corp is expected to under-perform the ZEN Graphene. But the stock apears to be less risky and, when comparing its historical volatility, Bone Biologics Corp is 1.16 times less risky than ZEN Graphene. The stock trades about -0.01 of its potential returns per unit of risk. The ZEN Graphene Solutions is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  93.00  in ZEN Graphene Solutions on December 27, 2024 and sell it today you would earn a total of  24.00  from holding ZEN Graphene Solutions or generate 25.81% return on investment over 90 days.

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

Bone Biologics Corp  vs.  ZEN Graphene Solutions

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.

ZEN Graphene Solutions

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZEN Graphene Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical and fundamental indicators, ZEN Graphene disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bone Biologics and ZEN Graphene

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

The idea behind Bone Biologics Corp and ZEN Graphene Solutions 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.