Correlation Between Sangamo Therapeutics and VectivBio Holding

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

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

Diversification Opportunities for Sangamo Therapeutics and VectivBio Holding

0.35

Correlation Coefficient

Sangamo Therapeutics  VectivBio Holding

Weak diversification

The 3 months correlation between Sangamo and VectivBio is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sangamo Therapeutics and VectivBio Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VectivBio Holding and Sangamo Therapeutics 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 Sangamo Therapeutics are associated (or correlated) with VectivBio Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VectivBio Holding has no effect on the direction of Sangamo Therapeutics i.e., Sangamo Therapeutics and VectivBio Holding go up and down completely randomly.

Pair Corralation between Sangamo Therapeutics and VectivBio Holding

Given the investment horizon of 90 days Sangamo Therapeutics is expected to under-perform the VectivBio Holding. In addition to that, Sangamo Therapeutics is 1.91 times more volatile than VectivBio Holding AG. It trades about -0.01 of its total potential returns per unit of risk. VectivBio Holding AG is currently generating about 0.12 per unit of volatility. If you would invest  864.00  in VectivBio Holding AG on July 21, 2024 and sell it today you would earn a total of  821.00  from holding VectivBio Holding AG or generate 95.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	35.08%
Values	Daily Returns

Sangamo Therapeutics  vs.  VectivBio Holding AG

Sangamo Therapeutics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sangamo Therapeutics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Sangamo Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

VectivBio Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sangamo Therapeutics and VectivBio Holding

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

The idea behind Sangamo Therapeutics and VectivBio Holding AG 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.