Correlation Between Surrozen Warrant and SAB Biotherapeutics

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

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

Diversification Opportunities for Surrozen Warrant and SAB Biotherapeutics

-0.13

Correlation Coefficient

Surrozen Warrant  SAB Biotherapeutics

Good diversification

The 3 months correlation between Surrozen and SAB is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Surrozen Warrant and SAB Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAB Biotherapeutics and Surrozen Warrant 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 Surrozen Warrant are associated (or correlated) with SAB Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAB Biotherapeutics has no effect on the direction of Surrozen Warrant i.e., Surrozen Warrant and SAB Biotherapeutics go up and down completely randomly.

Pair Corralation between Surrozen Warrant and SAB Biotherapeutics

Assuming the 90 days horizon Surrozen Warrant is expected to generate 1.9 times more return on investment than SAB Biotherapeutics. However, Surrozen Warrant is 1.9 times more volatile than SAB Biotherapeutics. It trades about 0.15 of its potential returns per unit of risk. SAB Biotherapeutics is currently generating about 0.04 per unit of risk. If you would invest  3.20  in Surrozen Warrant on December 29, 2024 and sell it today you would lose (0.68) from holding Surrozen Warrant or give up 21.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.18%
Values	Daily Returns

Surrozen Warrant  vs.  SAB Biotherapeutics

Surrozen Warrant

Risk-Adjusted Performance

Good

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

SAB Biotherapeutics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SAB Biotherapeutics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, SAB Biotherapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Surrozen Warrant and SAB Biotherapeutics

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

The idea behind Surrozen Warrant and SAB Biotherapeutics 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.