Correlation Between ATyr Pharma and Sana Biotechnology

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

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

Diversification Opportunities for ATyr Pharma and Sana Biotechnology

0.24

Correlation Coefficient

ATyr Pharma  Sana Biotechnology

Modest diversification

The 3 months correlation between ATyr and Sana is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding ATyr Pharma and Sana Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sana Biotechnology and ATyr Pharma 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 ATyr Pharma are associated (or correlated) with Sana Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sana Biotechnology has no effect on the direction of ATyr Pharma i.e., ATyr Pharma and Sana Biotechnology go up and down completely randomly.

Pair Corralation between ATyr Pharma and Sana Biotechnology

Given the investment horizon of 90 days ATyr Pharma is expected to under-perform the Sana Biotechnology. In addition to that, ATyr Pharma is 1.11 times more volatile than Sana Biotechnology. It trades about -0.04 of its total potential returns per unit of risk. Sana Biotechnology is currently generating about 0.0 per unit of volatility. If you would invest  379.00  in Sana Biotechnology on September 19, 2024 and sell it today you would lose (210.00) from holding Sana Biotechnology or give up 55.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	73.39%
Values	Daily Returns

ATyr Pharma  vs.  Sana Biotechnology

ATyr Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATyr Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ATyr Pharma is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Sana Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sana Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ATyr Pharma and Sana Biotechnology

The main advantage of trading using opposite ATyr Pharma and Sana Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATyr Pharma position performs unexpectedly, Sana Biotechnology 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 Sana Biotechnology will offset losses from the drop in Sana Biotechnology's long position.

The idea behind ATyr Pharma and Sana Biotechnology 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.