Correlation Between Aerovate Therapeutics and BigBearai Holdings

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

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

Diversification Opportunities for Aerovate Therapeutics and BigBearai Holdings

-0.6

Correlation Coefficient

Aerovate Therapeutics  BigBearai Holdings

Excellent diversification

The 3 months correlation between Aerovate and BigBearai is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and BigBearai Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BigBearai Holdings 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 BigBearai Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BigBearai Holdings has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and BigBearai Holdings go up and down completely randomly.

Pair Corralation between Aerovate Therapeutics and BigBearai Holdings

Given the investment horizon of 90 days Aerovate Therapeutics is expected to under-perform the BigBearai Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Aerovate Therapeutics is 6.56 times less risky than BigBearai Holdings. The stock trades about -0.07 of its potential returns per unit of risk. The BigBearai Holdings is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  220.00  in BigBearai Holdings on December 2, 2024 and sell it today you would earn a total of  296.00  from holding BigBearai Holdings or generate 134.55% 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.  BigBearai Holdings

Aerovate Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aerovate Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

BigBearai Holdings

Risk-Adjusted Performance

Good

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

Pair Trading with Aerovate Therapeutics and BigBearai Holdings

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

The idea behind Aerovate Therapeutics and BigBearai 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.