Correlation Between Tenon Medical and BICO Group

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

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

Diversification Opportunities for Tenon Medical and BICO Group

0.55

Correlation Coefficient

Tenon Medical  BICO Group

Very weak diversification

The 3 months correlation between Tenon and BICO is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Tenon Medical and BICO Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BICO Group AB and Tenon Medical 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 Tenon Medical are associated (or correlated) with BICO Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BICO Group AB has no effect on the direction of Tenon Medical i.e., Tenon Medical and BICO Group go up and down completely randomly.

Pair Corralation between Tenon Medical and BICO Group

Given the investment horizon of 90 days Tenon Medical is expected to generate 4.13 times more return on investment than BICO Group. However, Tenon Medical is 4.13 times more volatile than BICO Group AB. It trades about 0.0 of its potential returns per unit of risk. BICO Group AB is currently generating about -0.06 per unit of risk. If you would invest  385.00  in Tenon Medical on September 3, 2024 and sell it today you would lose (156.00) from holding Tenon Medical or give up 40.52% of portfolio value over 90 days.

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

Tenon Medical  vs.  BICO Group AB

Tenon Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tenon Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Tenon Medical is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

BICO Group AB

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Tenon Medical and BICO Group

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

The idea behind Tenon Medical and BICO Group AB 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.