Correlation Between SAB Biotherapeutics and Forte Biosciences

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

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

Diversification Opportunities for SAB Biotherapeutics and Forte Biosciences

0.87

Correlation Coefficient

SAB Biotherapeutics  Forte Biosciences

Very poor diversification

The 3 months correlation between SAB and Forte is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SAB Biotherapeutics and Forte Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forte Biosciences 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 Forte Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forte Biosciences has no effect on the direction of SAB Biotherapeutics i.e., SAB Biotherapeutics and Forte Biosciences go up and down completely randomly.

Pair Corralation between SAB Biotherapeutics and Forte Biosciences

Given the investment horizon of 90 days SAB Biotherapeutics is expected to generate 0.94 times more return on investment than Forte Biosciences. However, SAB Biotherapeutics is 1.06 times less risky than Forte Biosciences. It trades about -0.12 of its potential returns per unit of risk. Forte Biosciences is currently generating about -0.13 per unit of risk. If you would invest  418.00  in SAB Biotherapeutics on December 26, 2024 and sell it today you would lose (256.00) from holding SAB Biotherapeutics or give up 61.24% of portfolio value over 90 days.

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

SAB Biotherapeutics  vs.  Forte Biosciences

SAB Biotherapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days SAB Biotherapeutics 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 fundamental drivers remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Forte Biosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Forte Biosciences 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 fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with SAB Biotherapeutics and Forte Biosciences

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

The idea behind SAB Biotherapeutics and Forte Biosciences 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.