Correlation Between Sunshine Biopharma and Fate Therapeutics

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

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

Diversification Opportunities for Sunshine Biopharma and Fate Therapeutics

-0.24

Correlation Coefficient

Sunshine Biopharma  Fate Therapeutics

Very good diversification

The 3 months correlation between Sunshine and Fate is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sunshine Biopharma Warrant and Fate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fate Therapeutics and Sunshine Biopharma 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 Sunshine Biopharma Warrant are associated (or correlated) with Fate Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fate Therapeutics has no effect on the direction of Sunshine Biopharma i.e., Sunshine Biopharma and Fate Therapeutics go up and down completely randomly.

Pair Corralation between Sunshine Biopharma and Fate Therapeutics

Assuming the 90 days horizon Sunshine Biopharma Warrant is expected to generate 4.86 times more return on investment than Fate Therapeutics. However, Sunshine Biopharma is 4.86 times more volatile than Fate Therapeutics. It trades about 0.16 of its potential returns per unit of risk. Fate Therapeutics is currently generating about -0.47 per unit of risk. If you would invest  18.00  in Sunshine Biopharma Warrant on September 29, 2024 and sell it today you would earn a total of  5.00  from holding Sunshine Biopharma Warrant or generate 27.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.0%
Values	Daily Returns

Sunshine Biopharma Warrant  vs.  Fate Therapeutics

Sunshine Biopharma

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sunshine Biopharma Warrant are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, Sunshine Biopharma showed solid returns over the last few months and may actually be approaching a breakup point.

Fate Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fate Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Sunshine Biopharma and Fate Therapeutics

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

The idea behind Sunshine Biopharma Warrant and Fate Therapeutics 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.