Correlation Between Sana Biotechnology and Passage Bio

Can any of the company-specific risk be diversified away by investing in both Sana Biotechnology and Passage 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 Passage 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 Passage Bio, you can compare the effects of market volatilities on Sana Biotechnology and Passage 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 Passage Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sana Biotechnology and Passage Bio.

Diversification Opportunities for Sana Biotechnology and Passage Bio

-0.19

Correlation Coefficient

Sana Biotechnology  Passage Bio

Good diversification

The 3 months correlation between Sana and Passage is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sana Biotechnology and Passage Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Passage 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 Passage Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Passage Bio has no effect on the direction of Sana Biotechnology i.e., Sana Biotechnology and Passage Bio go up and down completely randomly.

Pair Corralation between Sana Biotechnology and Passage Bio

Given the investment horizon of 90 days Sana Biotechnology is expected to generate 0.78 times more return on investment than Passage Bio. However, Sana Biotechnology is 1.29 times less risky than Passage Bio. It trades about 0.2 of its potential returns per unit of risk. Passage Bio is currently generating about 0.0 per unit of risk. If you would invest  187.00  in Sana Biotechnology on May 5, 2025 and sell it today you would earn a total of  204.00  from holding Sana Biotechnology or generate 109.09% return on investment over 90 days.

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

Sana Biotechnology  vs.  Passage Bio

Sana Biotechnology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sana Biotechnology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sana Biotechnology sustained solid returns over the last few months and may actually be approaching a breakup point.

Passage Bio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Passage Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Passage Bio is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sana Biotechnology and Passage Bio

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

The idea behind Sana Biotechnology and Passage 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.