Correlation Between SAB Biotherapeutics and Zymeworks Common

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

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

Diversification Opportunities for SAB Biotherapeutics and Zymeworks Common

0.7

Correlation Coefficient

SAB Biotherapeutics  Zymeworks Common

Poor diversification

The 3 months correlation between SAB and Zymeworks is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SAB Biotherapeutics and Zymeworks Common Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zymeworks Common Stock 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 Zymeworks Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zymeworks Common Stock has no effect on the direction of SAB Biotherapeutics i.e., SAB Biotherapeutics and Zymeworks Common go up and down completely randomly.

Pair Corralation between SAB Biotherapeutics and Zymeworks Common

Assuming the 90 days horizon SAB Biotherapeutics is expected to generate 47.15 times more return on investment than Zymeworks Common. However, SAB Biotherapeutics is 47.15 times more volatile than Zymeworks Common Stock. It trades about 0.14 of its potential returns per unit of risk. Zymeworks Common Stock is currently generating about 0.13 per unit of risk. If you would invest  2.60  in SAB Biotherapeutics on September 4, 2024 and sell it today you would earn a total of  2.57  from holding SAB Biotherapeutics or generate 98.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	85.94%
Values	Daily Returns

SAB Biotherapeutics  vs.  Zymeworks Common Stock

SAB Biotherapeutics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SAB Biotherapeutics are ranked lower than 11 (%) 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.

Zymeworks Common Stock

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zymeworks Common Stock are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating primary indicators, Zymeworks Common exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SAB Biotherapeutics and Zymeworks Common

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

The idea behind SAB Biotherapeutics and Zymeworks Common Stock 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.