Correlation Between Aurora Spine and Cellink AB

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

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

Diversification Opportunities for Aurora Spine and Cellink AB

-0.79

Correlation Coefficient

Aurora Spine  Cellink AB

Pay attention - limited upside

The 3 months correlation between Aurora and Cellink is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Spine and Cellink AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cellink AB and Aurora Spine 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 Aurora Spine are associated (or correlated) with Cellink AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cellink AB has no effect on the direction of Aurora Spine i.e., Aurora Spine and Cellink AB go up and down completely randomly.

Pair Corralation between Aurora Spine and Cellink AB

Assuming the 90 days horizon Aurora Spine is expected to generate 1.28 times more return on investment than Cellink AB. However, Aurora Spine is 1.28 times more volatile than Cellink AB. It trades about 0.12 of its potential returns per unit of risk. Cellink AB is currently generating about -0.06 per unit of risk. If you would invest  19.00  in Aurora Spine on September 5, 2024 and sell it today you would earn a total of  11.00  from holding Aurora Spine or generate 57.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.82%
Values	Daily Returns

Aurora Spine  vs.  Cellink AB

Aurora Spine

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Spine are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Aurora Spine reported solid returns over the last few months and may actually be approaching a breakup point.

Cellink AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cellink AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Aurora Spine and Cellink AB

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

The idea behind Aurora Spine and Cellink 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.

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.