Correlation Between Sangui Biotech and Coastal Capital

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

By analyzing existing cross correlation between Sangui Biotech International and Coastal Capital Acq, you can compare the effects of market volatilities on Sangui Biotech and Coastal Capital 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 Sangui Biotech with a short position of Coastal Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sangui Biotech and Coastal Capital.

Diversification Opportunities for Sangui Biotech and Coastal Capital

0.14

Correlation Coefficient

Sangui Biotech  Coastal Capital

Average diversification

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

Pair Corralation between Sangui Biotech and Coastal Capital

Given the investment horizon of 90 days Sangui Biotech is expected to generate 3.49 times less return on investment than Coastal Capital. In addition to that, Sangui Biotech is 1.12 times more volatile than Coastal Capital Acq. It trades about 0.02 of its total potential returns per unit of risk. Coastal Capital Acq is currently generating about 0.09 per unit of volatility. If you would invest  0.15  in Coastal Capital Acq on October 11, 2024 and sell it today you would lose (0.06) from holding Coastal Capital Acq or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Sangui Biotech International  vs.  Coastal Capital Acq

Sangui Biotech Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sangui Biotech International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Coastal Capital Acq

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coastal Capital Acq are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Coastal Capital revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sangui Biotech and Coastal Capital

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

The idea behind Sangui Biotech International and Coastal Capital Acq 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.