Correlation Between Sangamo Therapeutics and Precigen

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

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

Diversification Opportunities for Sangamo Therapeutics and Precigen

-0.65

Correlation Coefficient

Sangamo Therapeutics  Precigen

Excellent diversification

The 3 months correlation between Sangamo and Precigen is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sangamo Therapeutics and Precigen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precigen and Sangamo Therapeutics 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 Sangamo Therapeutics are associated (or correlated) with Precigen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precigen has no effect on the direction of Sangamo Therapeutics i.e., Sangamo Therapeutics and Precigen go up and down completely randomly.

Pair Corralation between Sangamo Therapeutics and Precigen

Given the investment horizon of 90 days Sangamo Therapeutics is expected to under-perform the Precigen. In addition to that, Sangamo Therapeutics is 1.6 times more volatile than Precigen. It trades about -0.18 of its total potential returns per unit of risk. Precigen is currently generating about 0.29 per unit of volatility. If you would invest  74.00  in Precigen on October 26, 2024 and sell it today you would earn a total of  39.00  from holding Precigen or generate 52.7% return on investment over 90 days.

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

Sangamo Therapeutics  vs.  Precigen

Sangamo Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sangamo Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Precigen

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Precigen are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Precigen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sangamo Therapeutics and Precigen

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

The idea behind Sangamo Therapeutics and Precigen 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.