Correlation Between LENSAR and Bone Biologics
Can any of the company-specific risk be diversified away by investing in both LENSAR 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 LENSAR and Bone Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LENSAR Inc and Bone Biologics Corp, you can compare the effects of market volatilities on LENSAR 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 LENSAR with a short position of Bone Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of LENSAR and Bone Biologics.
Diversification Opportunities for LENSAR and Bone Biologics
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LENSAR and Bone is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding LENSAR Inc 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 LENSAR 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 LENSAR Inc 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 LENSAR i.e., LENSAR and Bone Biologics go up and down completely randomly.
Pair Corralation between LENSAR and Bone Biologics
Given the investment horizon of 90 days LENSAR is expected to generate 2.06 times less return on investment than Bone Biologics. But when comparing it to its historical volatility, LENSAR Inc is 4.1 times less risky than Bone Biologics. It trades about 0.2 of its potential returns per unit of risk. Bone Biologics Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 6,050 in Bone Biologics Corp on November 2, 2024 and sell it today you would earn a total of 1,749 from holding Bone Biologics Corp or generate 28.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.06% |
| Values | Daily Returns |
LENSAR Inc vs. Bone Biologics Corp
Performance |
| Timeline |
| LENSAR Inc |
| Bone Biologics Corp |
LENSAR and Bone Biologics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LENSAR and Bone Biologics
The main advantage of trading using opposite LENSAR and Bone Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LENSAR 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 LENSAR Inc 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.| Bone Biologics vs. Bone Biologics Corp | Bone Biologics vs. Biofrontera Warrants | Bone Biologics vs. Inspira Technologies Oxy |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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