Correlation Between SAB Biotherapeutics and Bio Path

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

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

Diversification Opportunities for SAB Biotherapeutics and Bio Path

0.08

Correlation Coefficient

SAB Biotherapeutics  Bio Path

Significant diversification

The 3 months correlation between SAB and Bio is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding SAB Biotherapeutics and Bio Path Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Path 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 Bio Path. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Path Holdings has no effect on the direction of SAB Biotherapeutics i.e., SAB Biotherapeutics and Bio Path go up and down completely randomly.

Pair Corralation between SAB Biotherapeutics and Bio Path

Assuming the 90 days horizon SAB Biotherapeutics is expected to generate 13.05 times more return on investment than Bio Path. However, SAB Biotherapeutics is 13.05 times more volatile than Bio Path Holdings. It trades about 0.16 of its potential returns per unit of risk. Bio Path Holdings is currently generating about -0.04 per unit of risk. If you would invest  2.10  in SAB Biotherapeutics on November 1, 2024 and sell it today you would earn a total of  1.88  from holding SAB Biotherapeutics or generate 89.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	78.54%
Values	Daily Returns

SAB Biotherapeutics  vs.  Bio Path 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 fairly uncertain basic indicators, SAB Biotherapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Bio Path Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with SAB Biotherapeutics and Bio Path

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

The idea behind SAB Biotherapeutics and Bio Path 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.