Correlation Between Sana Biotechnology and Virax Biolabs

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

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

Diversification Opportunities for Sana Biotechnology and Virax Biolabs

-0.14

Correlation Coefficient

Sana Biotechnology  Virax Biolabs

Good diversification

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

Pair Corralation between Sana Biotechnology and Virax Biolabs

Given the investment horizon of 90 days Sana Biotechnology is expected to generate 1.87 times more return on investment than Virax Biolabs. However, Sana Biotechnology is 1.87 times more volatile than Virax Biolabs Group. It trades about 0.05 of its potential returns per unit of risk. Virax Biolabs Group is currently generating about 0.09 per unit of risk. If you would invest  401.00  in Sana Biotechnology on October 12, 2024 and sell it today you would lose (35.00) from holding Sana Biotechnology or give up 8.73% of portfolio value over 90 days.

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

Sana Biotechnology  vs.  Virax Biolabs Group

Sana Biotechnology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sana Biotechnology are ranked lower than 4 (%) 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.

Virax Biolabs Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virax Biolabs Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Virax Biolabs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sana Biotechnology and Virax Biolabs

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

The idea behind Sana Biotechnology and Virax Biolabs Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.