Correlation Between SAB Biotherapeutics and Sol Gel
Can any of the company-specific risk be diversified away by investing in both SAB Biotherapeutics and Sol Gel 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 Sol Gel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAB Biotherapeutics and Sol Gel Technologies, you can compare the effects of market volatilities on SAB Biotherapeutics and Sol Gel 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 Sol Gel. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAB Biotherapeutics and Sol Gel.
Diversification Opportunities for SAB Biotherapeutics and Sol Gel
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SAB and Sol is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding SAB Biotherapeutics and Sol Gel Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sol Gel Technologies 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 Sol Gel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sol Gel Technologies has no effect on the direction of SAB Biotherapeutics i.e., SAB Biotherapeutics and Sol Gel go up and down completely randomly.
Pair Corralation between SAB Biotherapeutics and Sol Gel
Assuming the 90 days horizon SAB Biotherapeutics is expected to generate 7.54 times more return on investment than Sol Gel. However, SAB Biotherapeutics is 7.54 times more volatile than Sol Gel Technologies. It trades about 0.11 of its potential returns per unit of risk. Sol Gel Technologies is currently generating about 0.02 per unit of risk. If you would invest 4.95 in SAB Biotherapeutics on September 26, 2024 and sell it today you would earn a total of 0.05 from holding SAB Biotherapeutics or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 75.81% |
| Values | Daily Returns |
SAB Biotherapeutics vs. Sol Gel Technologies
Performance |
| Timeline |
| SAB Biotherapeutics |
| Sol Gel Technologies |
SAB Biotherapeutics and Sol Gel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAB Biotherapeutics and Sol Gel
The main advantage of trading using opposite SAB Biotherapeutics and Sol Gel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAB Biotherapeutics position performs unexpectedly, Sol Gel 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 Sol Gel will offset losses from the drop in Sol Gel's long position.| SAB Biotherapeutics vs. SAB Biotherapeutics | SAB Biotherapeutics vs. NRx Pharmaceuticals | SAB Biotherapeutics vs. Surrozen Warrant |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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