Correlation Between Bone Biologics and Aurora Spine

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

Diversification Opportunities for Bone Biologics and Aurora Spine

-0.43

Correlation Coefficient

Bone Biologics  Aurora Spine

Very good diversification

The 3 months correlation between Bone and Aurora is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bone Biologics Corp and Aurora Spine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Spine 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 Aurora Spine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Spine has no effect on the direction of Bone Biologics i.e., Bone Biologics and Aurora Spine go up and down completely randomly.

Pair Corralation between Bone Biologics and Aurora Spine

Assuming the 90 days horizon Bone Biologics Corp is expected to generate 3.8 times more return on investment than Aurora Spine. However, Bone Biologics is 3.8 times more volatile than Aurora Spine. It trades about 0.05 of its potential returns per unit of risk. Aurora Spine is currently generating about 0.0 per unit of risk. If you would invest  3,050  in Bone Biologics Corp on December 28, 2024 and sell it today you would lose (1,030) from holding Bone Biologics Corp or give up 33.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	50.0%
Values	Daily Returns

Bone Biologics Corp  vs.  Aurora Spine

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.

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.

Pair Trading with Bone Biologics and Aurora Spine

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

The idea behind Bone Biologics Corp and Aurora Spine 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.