Correlation Between Aerovate Therapeutics and Brasilagro Adr

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

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

Diversification Opportunities for Aerovate Therapeutics and Brasilagro Adr

-0.78

Correlation Coefficient

Aerovate Therapeutics  Brasilagro Adr

Pay attention - limited upside

The 3 months correlation between Aerovate and Brasilagro is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and Brasilagro Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brasilagro Adr 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 Brasilagro Adr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brasilagro Adr has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and Brasilagro Adr go up and down completely randomly.

Pair Corralation between Aerovate Therapeutics and Brasilagro Adr

Given the investment horizon of 90 days Aerovate Therapeutics is expected to generate 1.95 times more return on investment than Brasilagro Adr. However, Aerovate Therapeutics is 1.95 times more volatile than Brasilagro Adr. It trades about -0.04 of its potential returns per unit of risk. Brasilagro Adr is currently generating about -0.24 per unit of risk. If you would invest  266.00  in Aerovate Therapeutics on September 13, 2024 and sell it today you would lose (6.00) from holding Aerovate Therapeutics or give up 2.26% of portfolio value over 90 days.

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

Aerovate Therapeutics  vs.  Brasilagro Adr

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

Brasilagro Adr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brasilagro Adr 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 Brasilagro Adr

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

The idea behind Aerovate Therapeutics and Brasilagro Adr 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.