Correlation Between BICO Group and Aurora Spine

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

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

Diversification Opportunities for BICO Group and Aurora Spine

-0.12

Correlation Coefficient

BICO Group  Aurora Spine

Good diversification

The 3 months correlation between BICO and Aurora is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding BICO Group AB and Aurora Spine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Spine and BICO Group 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 BICO Group AB 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 BICO Group i.e., BICO Group and Aurora Spine go up and down completely randomly.

Pair Corralation between BICO Group and Aurora Spine

If you would invest  90.00  in BICO Group AB on December 28, 2024 and sell it today you would earn a total of  0.00  from holding BICO Group AB or generate 0.0% return on investment over 90 days.

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

BICO Group AB  vs.  Aurora Spine

BICO Group AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days BICO Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, BICO Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 BICO Group and Aurora Spine

The main advantage of trading using opposite BICO Group and Aurora Spine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BICO Group 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 BICO Group AB 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.