Correlation Between Sana Biotechnology and Instil Bio

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

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

Diversification Opportunities for Sana Biotechnology and Instil Bio

0.75

Correlation Coefficient

Sana Biotechnology  Instil Bio

Poor diversification

The 3 months correlation between Sana and Instil is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sana Biotechnology and Instil Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instil Bio and Sana Biotechnology 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 Sana Biotechnology are associated (or correlated) with Instil Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Instil Bio has no effect on the direction of Sana Biotechnology i.e., Sana Biotechnology and Instil Bio go up and down completely randomly.

Pair Corralation between Sana Biotechnology and Instil Bio

Given the investment horizon of 90 days Sana Biotechnology is expected to under-perform the Instil Bio. But the stock apears to be less risky and, when comparing its historical volatility, Sana Biotechnology is 1.22 times less risky than Instil Bio. The stock trades about -0.01 of its potential returns per unit of risk. The Instil Bio is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,780  in Instil Bio on September 25, 2024 and sell it today you would earn a total of  379.50  from holding Instil Bio or generate 21.32% return on investment over 90 days.

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

Sana Biotechnology  vs.  Instil Bio

Sana Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sana Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Instil Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Instil Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Sana Biotechnology and Instil Bio

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

The idea behind Sana Biotechnology and Instil Bio 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.