Correlation Between Aerovate Therapeutics and Accustem Sciences

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

By analyzing existing cross correlation between Aerovate Therapeutics and Accustem Sciences, you can compare the effects of market volatilities on Aerovate Therapeutics and Accustem Sciences 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 Accustem Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerovate Therapeutics and Accustem Sciences.

Diversification Opportunities for Aerovate Therapeutics and Accustem Sciences

-0.62

Correlation Coefficient

Aerovate Therapeutics  Accustem Sciences

Excellent diversification

The 3 months correlation between Aerovate and Accustem is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and Accustem Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accustem Sciences 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 Accustem Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accustem Sciences has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and Accustem Sciences go up and down completely randomly.

Pair Corralation between Aerovate Therapeutics and Accustem Sciences

Given the investment horizon of 90 days Aerovate Therapeutics is expected to generate 0.34 times more return on investment than Accustem Sciences. However, Aerovate Therapeutics is 2.95 times less risky than Accustem Sciences. It trades about 0.17 of its potential returns per unit of risk. Accustem Sciences is currently generating about 0.02 per unit of risk. If you would invest  186.00  in Aerovate Therapeutics on August 31, 2024 and sell it today you would earn a total of  78.00  from holding Aerovate Therapeutics or generate 41.94% return on investment over 90 days.

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

Aerovate Therapeutics  vs.  Accustem Sciences

Aerovate Therapeutics

Risk-Adjusted Performance

13 of 100

Good

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

Accustem Sciences

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Accustem Sciences are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Accustem Sciences unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aerovate Therapeutics and Accustem Sciences

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

The idea behind Aerovate Therapeutics and Accustem Sciences 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.