Correlation Between Eyepoint Pharmaceuticals and SAB Biotherapeutics

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

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

Diversification Opportunities for Eyepoint Pharmaceuticals and SAB Biotherapeutics

0.45

Correlation Coefficient

Eyepoint Pharmaceuticals  SAB Biotherapeutics

Very weak diversification

The 3 months correlation between Eyepoint and SAB is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Eyepoint Pharmaceuticals and SAB Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAB Biotherapeutics and Eyepoint Pharmaceuticals 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 Eyepoint Pharmaceuticals 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 Eyepoint Pharmaceuticals i.e., Eyepoint Pharmaceuticals and SAB Biotherapeutics go up and down completely randomly.

Pair Corralation between Eyepoint Pharmaceuticals and SAB Biotherapeutics

Given the investment horizon of 90 days Eyepoint Pharmaceuticals is expected to generate 24.0 times less return on investment than SAB Biotherapeutics. But when comparing it to its historical volatility, Eyepoint Pharmaceuticals is 1.72 times less risky than SAB Biotherapeutics. It trades about 0.01 of its potential returns per unit of risk. SAB Biotherapeutics is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  277.00  in SAB Biotherapeutics on September 12, 2024 and sell it today you would earn a total of  108.00  from holding SAB Biotherapeutics or generate 38.99% return on investment over 90 days.

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

Eyepoint Pharmaceuticals  vs.  SAB Biotherapeutics

Eyepoint Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Eyepoint Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Eyepoint Pharmaceuticals is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

SAB Biotherapeutics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SAB Biotherapeutics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, SAB Biotherapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eyepoint Pharmaceuticals and SAB Biotherapeutics

The main advantage of trading using opposite Eyepoint Pharmaceuticals and SAB Biotherapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eyepoint Pharmaceuticals 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 Eyepoint Pharmaceuticals 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.