Correlation Between SAB Biotherapeutics and DiaMedica Therapeutics
Can any of the company-specific risk be diversified away by investing in both SAB Biotherapeutics and DiaMedica Therapeutics 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 DiaMedica Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAB Biotherapeutics and DiaMedica Therapeutics, you can compare the effects of market volatilities on SAB Biotherapeutics and DiaMedica Therapeutics 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 DiaMedica Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAB Biotherapeutics and DiaMedica Therapeutics.
Diversification Opportunities for SAB Biotherapeutics and DiaMedica Therapeutics
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SAB and DiaMedica is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SAB Biotherapeutics and DiaMedica Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiaMedica Therapeutics 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 DiaMedica Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DiaMedica Therapeutics has no effect on the direction of SAB Biotherapeutics i.e., SAB Biotherapeutics and DiaMedica Therapeutics go up and down completely randomly.
Pair Corralation between SAB Biotherapeutics and DiaMedica Therapeutics
Assuming the 90 days horizon SAB Biotherapeutics is expected to generate 43.15 times more return on investment than DiaMedica Therapeutics. However, SAB Biotherapeutics is 43.15 times more volatile than DiaMedica Therapeutics. It trades about 0.2 of its potential returns per unit of risk. DiaMedica Therapeutics is currently generating about 0.12 per unit of risk. If you would invest 2.51 in SAB Biotherapeutics on August 29, 2024 and sell it today you would earn a total of 4.32 from holding SAB Biotherapeutics or generate 172.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 83.33% |
| Values | Daily Returns |
SAB Biotherapeutics vs. DiaMedica Therapeutics
Performance |
| Timeline |
| SAB Biotherapeutics |
| DiaMedica Therapeutics |
SAB Biotherapeutics and DiaMedica Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAB Biotherapeutics and DiaMedica Therapeutics
The main advantage of trading using opposite SAB Biotherapeutics and DiaMedica Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAB Biotherapeutics position performs unexpectedly, DiaMedica Therapeutics 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 DiaMedica Therapeutics will offset losses from the drop in DiaMedica Therapeutics' long position.| SAB Biotherapeutics vs. SAB Biotherapeutics | SAB Biotherapeutics vs. Jasper Therapeutics | SAB Biotherapeutics vs. NRx Pharmaceuticals |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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