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

-0.38

Correlation Coefficient

Aerovate Therapeutics  BigBearai Holdings

Very good diversification

The 3 months correlation between Aerovate and BigBearai is -0.38. 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 generate 0.16 times more return on investment than BigBearai Holdings. However, Aerovate Therapeutics is 6.23 times less risky than BigBearai Holdings. It trades about -0.04 of its potential returns per unit of risk. BigBearai Holdings is currently generating about -0.02 per unit of risk. If you would invest  266.00  in Aerovate Therapeutics on December 30, 2024 and sell it today you would lose (13.00) from holding Aerovate Therapeutics or give up 4.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
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 rather sound basic indicators, Aerovate Therapeutics is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

BigBearai Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days BigBearai Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..