Correlation Between Aerovate Therapeutics and Flowery Gold

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

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

Diversification Opportunities for Aerovate Therapeutics and Flowery Gold

-0.37

Correlation Coefficient

Aerovate Therapeutics  Flowery Gold

Very good diversification

The 3 months correlation between Aerovate and Flowery is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and Flowery Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flowery Gold Mines 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 Flowery Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flowery Gold Mines has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and Flowery Gold go up and down completely randomly.

Pair Corralation between Aerovate Therapeutics and Flowery Gold

Given the investment horizon of 90 days Aerovate Therapeutics is expected to generate 1.8 times less return on investment than Flowery Gold. In addition to that, Aerovate Therapeutics is 1.96 times more volatile than Flowery Gold Mines. It trades about 0.01 of its total potential returns per unit of risk. Flowery Gold Mines is currently generating about 0.03 per unit of volatility. If you would invest  13.00  in Flowery Gold Mines on September 12, 2024 and sell it today you would earn a total of  2.00  from holding Flowery Gold Mines or generate 15.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Aerovate Therapeutics  vs.  Flowery Gold Mines

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

Flowery Gold Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flowery Gold Mines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Aerovate Therapeutics and Flowery Gold

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

The idea behind Aerovate Therapeutics and Flowery Gold Mines 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.