Correlation Between Nu Med and Bone Biologics

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

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

Diversification Opportunities for Nu Med and Bone Biologics

0.85

Correlation Coefficient

Nu Med  Bone Biologics

Very poor diversification

The 3 months correlation between NUMD and Bone is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Nu Med Plus 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 Nu Med 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 Nu Med Plus 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 Nu Med i.e., Nu Med and Bone Biologics go up and down completely randomly.

Pair Corralation between Nu Med and Bone Biologics

Given the investment horizon of 90 days Nu Med Plus is expected to generate 1.39 times more return on investment than Bone Biologics. However, Nu Med is 1.39 times more volatile than Bone Biologics Corp. 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  1.80  in Nu Med Plus on October 5, 2024 and sell it today you would lose (0.26) from holding Nu Med Plus or give up 14.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.63%
Values	Daily Returns

Nu Med Plus  vs.  Bone Biologics Corp

Nu Med Plus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nu Med Plus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Bone Biologics Corp

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nu Med and Bone Biologics

The main advantage of trading using opposite Nu Med and Bone Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Med 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 Nu Med Plus 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.