Correlation Between Aerovate Therapeutics and Bayport International

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

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

Diversification Opportunities for Aerovate Therapeutics and Bayport International

-0.44

Correlation Coefficient

Aerovate Therapeutics  Bayport International

Very good diversification

The 3 months correlation between Aerovate and Bayport is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and Bayport International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayport International 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 Bayport International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayport International has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and Bayport International go up and down completely randomly.

Pair Corralation between Aerovate Therapeutics and Bayport International

Given the investment horizon of 90 days Aerovate Therapeutics is expected to generate 0.43 times more return on investment than Bayport International. However, Aerovate Therapeutics is 2.32 times less risky than Bayport International. It trades about 0.16 of its potential returns per unit of risk. Bayport International Holdings is currently generating about -0.13 per unit of risk. If you would invest  188.00  in Aerovate Therapeutics on September 12, 2024 and sell it today you would earn a total of  75.00  from holding Aerovate Therapeutics or generate 39.89% return on investment over 90 days.

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

Aerovate Therapeutics  vs.  Bayport International Holdings

Aerovate Therapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aerovate Therapeutics are ranked lower than 12 (%) 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.

Bayport International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bayport International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Aerovate Therapeutics and Bayport International

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

The idea behind Aerovate Therapeutics and Bayport International Holdings 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.