Correlation Between Sana Biotechnology and Equillium

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

By analyzing existing cross correlation between Sana Biotechnology and Equillium, you can compare the effects of market volatilities on Sana Biotechnology and Equillium 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 Sana Biotechnology with a short position of Equillium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sana Biotechnology and Equillium.

Diversification Opportunities for Sana Biotechnology and Equillium

0.06

Correlation Coefficient

Sana Biotechnology  Equillium

Significant diversification

The 3 months correlation between Sana and Equillium is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sana Biotechnology and Equillium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equillium and Sana Biotechnology 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 Sana Biotechnology are associated (or correlated) with Equillium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equillium has no effect on the direction of Sana Biotechnology i.e., Sana Biotechnology and Equillium go up and down completely randomly.

Pair Corralation between Sana Biotechnology and Equillium

Given the investment horizon of 90 days Sana Biotechnology is expected to generate 2.83 times more return on investment than Equillium. However, Sana Biotechnology is 2.83 times more volatile than Equillium. It trades about 0.07 of its potential returns per unit of risk. Equillium is currently generating about -0.03 per unit of risk. If you would invest  161.00  in Sana Biotechnology on December 27, 2024 and sell it today you would earn a total of  24.00  from holding Sana Biotechnology or generate 14.91% return on investment over 90 days.

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

Sana Biotechnology  vs.  Equillium

Sana Biotechnology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sana Biotechnology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sana Biotechnology sustained solid returns over the last few months and may actually be approaching a breakup point.

Equillium

Risk-Adjusted Performance

Insignificant

Over the last 90 days Equillium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Sana Biotechnology and Equillium

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

The idea behind Sana Biotechnology and Equillium 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.