Correlation Between SAB Biotherapeutics and Wesana Health

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

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

Diversification Opportunities for SAB Biotherapeutics and Wesana Health

0.23

Correlation Coefficient

SAB Biotherapeutics  Wesana Health

Modest diversification

The 3 months correlation between SAB and Wesana is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding SAB Biotherapeutics and Wesana Health Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesana Health Holdings 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 Wesana Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesana Health Holdings has no effect on the direction of SAB Biotherapeutics i.e., SAB Biotherapeutics and Wesana Health go up and down completely randomly.

Pair Corralation between SAB Biotherapeutics and Wesana Health

Given the investment horizon of 90 days SAB Biotherapeutics is expected to generate 12.22 times less return on investment than Wesana Health. But when comparing it to its historical volatility, SAB Biotherapeutics is 7.92 times less risky than Wesana Health. It trades about 0.18 of its potential returns per unit of risk. Wesana Health Holdings is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  0.62  in Wesana Health Holdings on September 25, 2024 and sell it today you would earn a total of  1.58  from holding Wesana Health Holdings or generate 254.84% return on investment over 90 days.

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

SAB Biotherapeutics  vs.  Wesana Health Holdings

SAB Biotherapeutics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SAB Biotherapeutics are ranked lower than 8 (%) 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.

Wesana Health Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wesana Health Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Wesana Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SAB Biotherapeutics and Wesana Health

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

The idea behind SAB Biotherapeutics and Wesana Health Holdings 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.