Correlation Between SAB Biotherapeutics and Absci Corp

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

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

Diversification Opportunities for SAB Biotherapeutics and Absci Corp

-0.24

Correlation Coefficient

SAB Biotherapeutics  Absci Corp

Very good diversification

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

Pair Corralation between SAB Biotherapeutics and Absci Corp

Assuming the 90 days horizon SAB Biotherapeutics is expected to generate 3.24 times more return on investment than Absci Corp. However, SAB Biotherapeutics is 3.24 times more volatile than Absci Corp. It trades about 0.07 of its potential returns per unit of risk. Absci Corp is currently generating about 0.04 per unit of risk. If you would invest  5.00  in SAB Biotherapeutics on December 24, 2024 and sell it today you would lose (2.31) from holding SAB Biotherapeutics or give up 46.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.8%
Values	Daily Returns

SAB Biotherapeutics  vs.  Absci Corp

SAB Biotherapeutics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SAB Biotherapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, SAB Biotherapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Absci Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Absci Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Absci Corp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SAB Biotherapeutics and Absci Corp

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

The idea behind SAB Biotherapeutics and Absci Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.