Correlation Between Sana Biotechnology and Instil Bio

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

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

Diversification Opportunities for Sana Biotechnology and Instil Bio

0.28

Correlation Coefficient

Sana Biotechnology  Instil Bio

Modest diversification

The 3 months correlation between Sana and Instil is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sana Biotechnology and Instil Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instil Bio 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 Instil Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Instil Bio has no effect on the direction of Sana Biotechnology i.e., Sana Biotechnology and Instil Bio go up and down completely randomly.

Pair Corralation between Sana Biotechnology and Instil Bio

Given the investment horizon of 90 days Sana Biotechnology is expected to generate 2.95 times more return on investment than Instil Bio. However, Sana Biotechnology is 2.95 times more volatile than Instil Bio. It trades about 0.08 of its potential returns per unit of risk. Instil Bio is currently generating about -0.01 per unit of risk. If you would invest  175.00  in Sana Biotechnology on December 24, 2024 and sell it today you would earn a total of  56.00  from holding Sana Biotechnology or generate 32.0% return on investment over 90 days.

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

Sana Biotechnology  vs.  Instil Bio

Sana Biotechnology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sana Biotechnology are ranked lower than 6 (%) 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.

Instil Bio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Instil Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Instil Bio is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sana Biotechnology and Instil Bio

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

The idea behind Sana Biotechnology and Instil Bio 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.