Correlation Between SAB Biotherapeutics and NewAmsterdam Pharma
Can any of the company-specific risk be diversified away by investing in both SAB Biotherapeutics and NewAmsterdam Pharma 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 SAB Biotherapeutics and NewAmsterdam Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAB Biotherapeutics and NewAmsterdam Pharma, you can compare the effects of market volatilities on SAB Biotherapeutics and NewAmsterdam Pharma 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 SAB Biotherapeutics with a short position of NewAmsterdam Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAB Biotherapeutics and NewAmsterdam Pharma.
Diversification Opportunities for SAB Biotherapeutics and NewAmsterdam Pharma
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SAB and NewAmsterdam is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SAB Biotherapeutics and NewAmsterdam Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewAmsterdam Pharma and SAB Biotherapeutics 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 SAB Biotherapeutics are associated (or correlated) with NewAmsterdam Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewAmsterdam Pharma has no effect on the direction of SAB Biotherapeutics i.e., SAB Biotherapeutics and NewAmsterdam Pharma go up and down completely randomly.
Pair Corralation between SAB Biotherapeutics and NewAmsterdam Pharma
Given the investment horizon of 90 days SAB Biotherapeutics is expected to generate 2.52 times less return on investment than NewAmsterdam Pharma. In addition to that, SAB Biotherapeutics is 1.84 times more volatile than NewAmsterdam Pharma. It trades about 0.01 of its total potential returns per unit of risk. NewAmsterdam Pharma is currently generating about 0.04 per unit of volatility. If you would invest 1,320 in NewAmsterdam Pharma on November 19, 2024 and sell it today you would earn a total of 671.00 from holding NewAmsterdam Pharma or generate 50.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAB Biotherapeutics vs. NewAmsterdam Pharma
Performance |
| Timeline |
| SAB Biotherapeutics |
| NewAmsterdam Pharma |
SAB Biotherapeutics and NewAmsterdam Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAB Biotherapeutics and NewAmsterdam Pharma
The main advantage of trading using opposite SAB Biotherapeutics and NewAmsterdam Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAB Biotherapeutics position performs unexpectedly, NewAmsterdam Pharma 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 NewAmsterdam Pharma will offset losses from the drop in NewAmsterdam Pharma's long position.| SAB Biotherapeutics vs. Processa Pharmaceuticals | SAB Biotherapeutics vs. Third Harmonic Bio | SAB Biotherapeutics vs. Cingulate Warrants | SAB Biotherapeutics vs. Anebulo Pharmaceuticals |
| NewAmsterdam Pharma vs. Monte Rosa Therapeutics | NewAmsterdam Pharma vs. Inventiva Sa | NewAmsterdam Pharma vs. Cullinan Oncology LLC | NewAmsterdam Pharma vs. Compass Therapeutics |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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