Correlation Between Aditxt and SAB Biotherapeutics
Can any of the company-specific risk be diversified away by investing in both Aditxt and SAB Biotherapeutics 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 Aditxt and SAB Biotherapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aditxt Inc and SAB Biotherapeutics, you can compare the effects of market volatilities on Aditxt and SAB Biotherapeutics 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 Aditxt with a short position of SAB Biotherapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aditxt and SAB Biotherapeutics.
Diversification Opportunities for Aditxt and SAB Biotherapeutics
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aditxt and SAB is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Aditxt Inc and SAB Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAB Biotherapeutics and Aditxt 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 Aditxt Inc are associated (or correlated) with SAB Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAB Biotherapeutics has no effect on the direction of Aditxt i.e., Aditxt and SAB Biotherapeutics go up and down completely randomly.
Pair Corralation between Aditxt and SAB Biotherapeutics
Given the investment horizon of 90 days Aditxt Inc is expected to under-perform the SAB Biotherapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Aditxt Inc is 1.11 times less risky than SAB Biotherapeutics. The stock trades about -0.47 of its potential returns per unit of risk. The SAB Biotherapeutics is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 270.00 in SAB Biotherapeutics on September 30, 2024 and sell it today you would earn a total of 148.00 from holding SAB Biotherapeutics or generate 54.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Aditxt Inc vs. SAB Biotherapeutics
Performance |
Timeline |
Aditxt Inc |
SAB Biotherapeutics |
Aditxt and SAB Biotherapeutics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aditxt and SAB Biotherapeutics
The main advantage of trading using opposite Aditxt and SAB Biotherapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aditxt position performs unexpectedly, SAB Biotherapeutics 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 SAB Biotherapeutics will offset losses from the drop in SAB Biotherapeutics' long position.The idea behind Aditxt Inc and SAB Biotherapeutics 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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