Correlation Between Bioventus and Nexalin Technology

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

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

Diversification Opportunities for Bioventus and Nexalin Technology

-0.16

Correlation Coefficient

Bioventus  Nexalin Technology

Good diversification

The 3 months correlation between Bioventus and Nexalin is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bioventus and Nexalin Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexalin Technology and Bioventus 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 Bioventus are associated (or correlated) with Nexalin Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexalin Technology has no effect on the direction of Bioventus i.e., Bioventus and Nexalin Technology go up and down completely randomly.

Pair Corralation between Bioventus and Nexalin Technology

Considering the 90-day investment horizon Bioventus is expected to generate 0.71 times more return on investment than Nexalin Technology. However, Bioventus is 1.42 times less risky than Nexalin Technology. It trades about 0.02 of its potential returns per unit of risk. Nexalin Technology is currently generating about -0.28 per unit of risk. If you would invest  506.00  in Bioventus on February 9, 2024 and sell it today you would lose (2.00) from holding Bioventus or give up 0.4% of portfolio value over 90 days.

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

Bioventus  vs.  Nexalin Technology

Bioventus

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bioventus are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Bioventus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nexalin Technology

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nexalin Technology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Nexalin Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bioventus and Nexalin Technology

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

The idea behind Bioventus and Nexalin Technology 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.