Correlation Between Sabio Holdings and Eastwood Bio

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

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

Diversification Opportunities for Sabio Holdings and Eastwood Bio

0.27

Correlation Coefficient

Sabio Holdings  Eastwood Bio

Modest diversification

The 3 months correlation between Sabio and Eastwood is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sabio Holdings and Eastwood Bio Medical Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastwood Bio Medical and Sabio Holdings 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 Sabio Holdings are associated (or correlated) with Eastwood Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastwood Bio Medical has no effect on the direction of Sabio Holdings i.e., Sabio Holdings and Eastwood Bio go up and down completely randomly.

Pair Corralation between Sabio Holdings and Eastwood Bio

Assuming the 90 days trading horizon Sabio Holdings is expected to generate 0.36 times more return on investment than Eastwood Bio. However, Sabio Holdings is 2.8 times less risky than Eastwood Bio. It trades about 0.04 of its potential returns per unit of risk. Eastwood Bio Medical Canada is currently generating about 0.0 per unit of risk. If you would invest  47.00  in Sabio Holdings on September 24, 2024 and sell it today you would earn a total of  3.00  from holding Sabio Holdings or generate 6.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Sabio Holdings  vs.  Eastwood Bio Medical Canada

Sabio Holdings

Risk-Adjusted Performance

3 of 100

Weak

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

Eastwood Bio Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastwood Bio Medical Canada has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Eastwood Bio is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sabio Holdings and Eastwood Bio

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

The idea behind Sabio Holdings and Eastwood Bio Medical Canada 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.