Correlation Between SAB Biotherapeutics and Tempest Therapeutics

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

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

Diversification Opportunities for SAB Biotherapeutics and Tempest Therapeutics

0.22

Correlation Coefficient

SAB Biotherapeutics  Tempest Therapeutics

Modest diversification

The 3 months correlation between SAB and Tempest is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding SAB Biotherapeutics and Tempest Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tempest Therapeutics 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 Tempest Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tempest Therapeutics has no effect on the direction of SAB Biotherapeutics i.e., SAB Biotherapeutics and Tempest Therapeutics go up and down completely randomly.

Pair Corralation between SAB Biotherapeutics and Tempest Therapeutics

Given the investment horizon of 90 days SAB Biotherapeutics is expected to under-perform the Tempest Therapeutics. In addition to that, SAB Biotherapeutics is 2.75 times more volatile than Tempest Therapeutics. It trades about -0.13 of its total potential returns per unit of risk. Tempest Therapeutics is currently generating about -0.01 per unit of volatility. If you would invest  84.00  in Tempest Therapeutics on December 27, 2024 and sell it today you would lose (4.00) from holding Tempest Therapeutics or give up 4.76% of portfolio value over 90 days.

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

SAB Biotherapeutics  vs.  Tempest Therapeutics

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.

Tempest Therapeutics

Risk-Adjusted Performance

Very Weak

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

Pair Trading with SAB Biotherapeutics and Tempest Therapeutics

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

The idea behind SAB Biotherapeutics and Tempest Therapeutics 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.