Correlation Between Histogen and SAB Biotherapeutics

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

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

Diversification Opportunities for Histogen and SAB Biotherapeutics

-0.13

Correlation Coefficient

Histogen  SAB Biotherapeutics

Good diversification

The 3 months correlation between Histogen and SAB is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Histogen and SAB Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAB Biotherapeutics and Histogen 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 Histogen 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 Histogen i.e., Histogen and SAB Biotherapeutics go up and down completely randomly.

Pair Corralation between Histogen and SAB Biotherapeutics

Given the investment horizon of 90 days Histogen is expected to under-perform the SAB Biotherapeutics. In addition to that, Histogen is 1.72 times more volatile than SAB Biotherapeutics. It trades about -0.11 of its total potential returns per unit of risk. SAB Biotherapeutics is currently generating about 0.03 per unit of volatility. If you would invest  293.00  in SAB Biotherapeutics on September 3, 2024 and sell it today you would lose (12.00) from holding SAB Biotherapeutics or give up 4.1% of portfolio value over 90 days.

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

Histogen  vs.  SAB Biotherapeutics

Histogen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Histogen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

SAB Biotherapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SAB Biotherapeutics are ranked lower than 2 (%) 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 Histogen and SAB Biotherapeutics

The main advantage of trading using opposite Histogen and SAB Biotherapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Histogen 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 Histogen 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.