Correlation Between SAB Biotherapeutics and Cingulate

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

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

Diversification Opportunities for SAB Biotherapeutics and Cingulate

-0.49

Correlation Coefficient

SAB Biotherapeutics  Cingulate

Very good diversification

The 3 months correlation between SAB and Cingulate is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding SAB Biotherapeutics and Cingulate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cingulate and SAB Biotherapeutics 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 SAB Biotherapeutics are associated (or correlated) with Cingulate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cingulate has no effect on the direction of SAB Biotherapeutics i.e., SAB Biotherapeutics and Cingulate go up and down completely randomly.

Pair Corralation between SAB Biotherapeutics and Cingulate

Assuming the 90 days horizon SAB Biotherapeutics is expected to generate 21.52 times more return on investment than Cingulate. However, SAB Biotherapeutics is 21.52 times more volatile than Cingulate. It trades about 0.15 of its potential returns per unit of risk. Cingulate is currently generating about -0.08 per unit of risk. If you would invest  2.60  in SAB Biotherapeutics on August 31, 2024 and sell it today you would earn a total of  4.23  from holding SAB Biotherapeutics or generate 162.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	82.81%
Values	Daily Returns

SAB Biotherapeutics  vs.  Cingulate

SAB Biotherapeutics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SAB Biotherapeutics are ranked lower than 11 (%) 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.

Cingulate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cingulate 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 basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SAB Biotherapeutics and Cingulate

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

The idea behind SAB Biotherapeutics and Cingulate 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.

Check out your portfolio center.

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.