Correlation Between Third Harmonic and SAB Biotherapeutics

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

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

Diversification Opportunities for Third Harmonic and SAB Biotherapeutics

0.68

Correlation Coefficient

Third Harmonic  SAB Biotherapeutics

Poor diversification

The 3 months correlation between Third and SAB is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Third Harmonic Bio and SAB Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAB Biotherapeutics and Third Harmonic 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 Third Harmonic Bio 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 Third Harmonic i.e., Third Harmonic and SAB Biotherapeutics go up and down completely randomly.

Pair Corralation between Third Harmonic and SAB Biotherapeutics

Given the investment horizon of 90 days Third Harmonic is expected to generate 1.08 times less return on investment than SAB Biotherapeutics. But when comparing it to its historical volatility, Third Harmonic Bio is 1.93 times less risky than SAB Biotherapeutics. It trades about 0.01 of its potential returns per unit of risk. SAB Biotherapeutics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  567.00  in SAB Biotherapeutics on December 2, 2024 and sell it today you would lose (396.00) from holding SAB Biotherapeutics or give up 69.84% of portfolio value over 90 days.

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

Third Harmonic Bio  vs.  SAB Biotherapeutics

Third Harmonic Bio

Risk-Adjusted Performance

Very Weak

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

SAB Biotherapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days SAB Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, SAB Biotherapeutics is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Third Harmonic and SAB Biotherapeutics

The main advantage of trading using opposite Third Harmonic and SAB Biotherapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Third Harmonic 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 Third Harmonic Bio 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.