Correlation Between SAB Biotherapeutics and Fennec Pharmaceuticals

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

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

Diversification Opportunities for SAB Biotherapeutics and Fennec Pharmaceuticals

-0.6

Correlation Coefficient

SAB Biotherapeutics  Fennec Pharmaceuticals

Excellent diversification

The 3 months correlation between SAB and Fennec is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding SAB Biotherapeutics and Fennec Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fennec Pharmaceuticals 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 Fennec Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fennec Pharmaceuticals has no effect on the direction of SAB Biotherapeutics i.e., SAB Biotherapeutics and Fennec Pharmaceuticals go up and down completely randomly.

Pair Corralation between SAB Biotherapeutics and Fennec Pharmaceuticals

Given the investment horizon of 90 days SAB Biotherapeutics is expected to under-perform the Fennec Pharmaceuticals. In addition to that, SAB Biotherapeutics is 4.55 times more volatile than Fennec Pharmaceuticals. It trades about -0.01 of its total potential returns per unit of risk. Fennec Pharmaceuticals is currently generating about 0.09 per unit of volatility. If you would invest  624.00  in Fennec Pharmaceuticals on December 1, 2024 and sell it today you would earn a total of  78.00  from holding Fennec Pharmaceuticals or generate 12.5% return on investment over 90 days.

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

SAB Biotherapeutics  vs.  Fennec Pharmaceuticals

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 latest weak performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Fennec Pharmaceuticals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fennec Pharmaceuticals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Fennec Pharmaceuticals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SAB Biotherapeutics and Fennec Pharmaceuticals

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

The idea behind SAB Biotherapeutics and Fennec Pharmaceuticals 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.