Correlation Between Bone Biologics and Nihon Kohden

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

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

Diversification Opportunities for Bone Biologics and Nihon Kohden

0.4

Correlation Coefficient

Bone Biologics  Nihon Kohden

Very weak diversification

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

Pair Corralation between Bone Biologics and Nihon Kohden

Given the investment horizon of 90 days Bone Biologics Corp is expected to under-perform the Nihon Kohden. In addition to that, Bone Biologics is 2.95 times more volatile than Nihon Kohden Corp. It trades about -0.03 of its total potential returns per unit of risk. Nihon Kohden Corp is currently generating about 0.02 per unit of volatility. If you would invest  1,164  in Nihon Kohden Corp on September 30, 2024 and sell it today you would earn a total of  150.00  from holding Nihon Kohden Corp or generate 12.89% return on investment over 90 days.

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

Bone Biologics Corp  vs.  Nihon Kohden Corp

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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Nihon Kohden Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nihon Kohden Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Nihon Kohden is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bone Biologics and Nihon Kohden

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

The idea behind Bone Biologics Corp and Nihon Kohden 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.