Correlation Between SAB Biotherapeutics and EnGene Holdings

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

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

Diversification Opportunities for SAB Biotherapeutics and EnGene Holdings

-0.14

Correlation Coefficient

SAB Biotherapeutics  EnGene Holdings

Good diversification

The 3 months correlation between SAB and EnGene is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding SAB Biotherapeutics and enGene Holdings Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on enGene Holdings Common 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 EnGene Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of enGene Holdings Common has no effect on the direction of SAB Biotherapeutics i.e., SAB Biotherapeutics and EnGene Holdings go up and down completely randomly.

Pair Corralation between SAB Biotherapeutics and EnGene Holdings

Assuming the 90 days horizon SAB Biotherapeutics is expected to generate 3.09 times more return on investment than EnGene Holdings. However, SAB Biotherapeutics is 3.09 times more volatile than enGene Holdings Common. It trades about 0.14 of its potential returns per unit of risk. enGene Holdings Common is currently generating about 0.05 per unit of risk. If you would invest  7.50  in SAB Biotherapeutics on October 8, 2024 and sell it today you would lose (1.26) from holding SAB Biotherapeutics or give up 16.8% of portfolio value over 90 days.

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

SAB Biotherapeutics  vs.  enGene Holdings Common

SAB Biotherapeutics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SAB Biotherapeutics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, SAB Biotherapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

enGene Holdings Common

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in enGene Holdings Common are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, EnGene Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SAB Biotherapeutics and EnGene Holdings

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

The idea behind SAB Biotherapeutics and enGene Holdings Common 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.