Correlation Between Aerovate Therapeutics and Codiak BioSciences

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

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

Diversification Opportunities for Aerovate Therapeutics and Codiak BioSciences

0.0

Correlation Coefficient

Aerovate Therapeutics  Codiak BioSciences

Pay attention - limited upside

The 3 months correlation between Aerovate and Codiak is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and Codiak BioSciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codiak BioSciences 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 Codiak BioSciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Codiak BioSciences has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and Codiak BioSciences go up and down completely randomly.

Pair Corralation between Aerovate Therapeutics and Codiak BioSciences

If you would invest  245.00  in Aerovate Therapeutics on September 1, 2024 and sell it today you would earn a total of  18.00  from holding Aerovate Therapeutics or generate 7.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Aerovate Therapeutics  vs.  Codiak BioSciences

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 weak basic indicators, Aerovate Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Codiak BioSciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Codiak BioSciences has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Codiak BioSciences is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Aerovate Therapeutics and Codiak BioSciences

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

The idea behind Aerovate Therapeutics and Codiak BioSciences 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.