Correlation Between Aerovate Therapeutics and Golden Agri-Resources

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

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

Diversification Opportunities for Aerovate Therapeutics and Golden Agri-Resources

0.61

Correlation Coefficient

Aerovate Therapeutics  Golden Agri-Resources

Poor diversification

The 3 months correlation between Aerovate and Golden is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and Golden Agri Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Agri Resources 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 Golden Agri-Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Agri Resources has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and Golden Agri-Resources go up and down completely randomly.

Pair Corralation between Aerovate Therapeutics and Golden Agri-Resources

Given the investment horizon of 90 days Aerovate Therapeutics is expected to generate 0.75 times more return on investment than Golden Agri-Resources. However, Aerovate Therapeutics is 1.33 times less risky than Golden Agri-Resources. It trades about -0.01 of its potential returns per unit of risk. Golden Agri Resources is currently generating about -0.04 per unit of risk. If you would invest  256.00  in Aerovate Therapeutics on December 23, 2024 and sell it today you would lose (4.00) from holding Aerovate Therapeutics or give up 1.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Aerovate Therapeutics  vs.  Golden Agri Resources

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.

Golden Agri Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Agri Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Aerovate Therapeutics and Golden Agri-Resources

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

The idea behind Aerovate Therapeutics and Golden Agri Resources 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.