Correlation Between Cellink AB and Bone Biologics

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

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

Diversification Opportunities for Cellink AB and Bone Biologics

0.4

Correlation Coefficient

Cellink AB  Bone Biologics

Very weak diversification

The 3 months correlation between Cellink and Bone is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cellink AB and Bone Biologics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bone Biologics Corp and Cellink AB 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 Cellink AB are associated (or correlated) with Bone Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bone Biologics Corp has no effect on the direction of Cellink AB i.e., Cellink AB and Bone Biologics go up and down completely randomly.

Pair Corralation between Cellink AB and Bone Biologics

Assuming the 90 days horizon Cellink AB is expected to generate 2.21 times less return on investment than Bone Biologics. But when comparing it to its historical volatility, Cellink AB is 6.72 times less risky than Bone Biologics. It trades about 0.16 of its potential returns per unit of risk. Bone Biologics Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,050  in Bone Biologics Corp on December 29, 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 Together
Strength	Weak
Accuracy	46.03%
Values	Daily Returns

Cellink AB  vs.  Bone Biologics Corp

Cellink AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cellink AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Cellink AB reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Cellink AB and Bone Biologics

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

The idea behind Cellink AB and Bone Biologics Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.