Correlation Between Delcath Systems and Bone Biologics

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

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

Diversification Opportunities for Delcath Systems and Bone Biologics

0.47

Correlation Coefficient

Delcath Systems  Bone Biologics

Very weak diversification

The 3 months correlation between Delcath and Bone is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Delcath Systems 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 Delcath Systems 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 Delcath Systems 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 Delcath Systems i.e., Delcath Systems and Bone Biologics go up and down completely randomly.

Pair Corralation between Delcath Systems and Bone Biologics

Given the investment horizon of 90 days Delcath Systems is expected to generate 0.74 times more return on investment than Bone Biologics. However, Delcath Systems is 1.34 times less risky than Bone Biologics. It trades about 0.07 of its potential returns per unit of risk. Bone Biologics Corp is currently generating about -0.01 per unit of risk. If you would invest  1,189  in Delcath Systems on December 28, 2024 and sell it today you would earn a total of  151.00  from holding Delcath Systems or generate 12.7% return on investment over 90 days.

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

Delcath Systems  vs.  Bone Biologics Corp

Delcath Systems

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Delcath Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Delcath Systems demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Delcath Systems and Bone Biologics

The main advantage of trading using opposite Delcath Systems and Bone Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delcath Systems 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 Delcath Systems 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.