Correlation Between Aerovate Therapeutics and Atlantic Sapphire

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

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

Diversification Opportunities for Aerovate Therapeutics and Atlantic Sapphire

-0.13

Correlation Coefficient

Aerovate Therapeutics  Atlantic Sapphire

Good diversification

The 3 months correlation between Aerovate and Atlantic is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and Atlantic Sapphire ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic Sapphire ASA and Aerovate 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 Aerovate Therapeutics are associated (or correlated) with Atlantic Sapphire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic Sapphire ASA has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and Atlantic Sapphire go up and down completely randomly.

Pair Corralation between Aerovate Therapeutics and Atlantic Sapphire

Given the investment horizon of 90 days Aerovate Therapeutics is expected to under-perform the Atlantic Sapphire. But the stock apears to be less risky and, when comparing its historical volatility, Aerovate Therapeutics is 8.1 times less risky than Atlantic Sapphire. The stock trades about -0.04 of its potential returns per unit of risk. The Atlantic Sapphire ASA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.85  in Atlantic Sapphire ASA on October 20, 2024 and sell it today you would earn a total of  0.15  from holding Atlantic Sapphire ASA or generate 17.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Aerovate Therapeutics  vs.  Atlantic Sapphire ASA

Aerovate Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aerovate Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Aerovate Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Atlantic Sapphire ASA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atlantic Sapphire ASA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Atlantic Sapphire reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aerovate Therapeutics and Atlantic Sapphire

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

The idea behind Aerovate Therapeutics and Atlantic Sapphire ASA 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.