Correlation Between Aerovate Therapeutics and Ono Pharmaceutical

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

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

Diversification Opportunities for Aerovate Therapeutics and Ono Pharmaceutical

-0.11

Correlation Coefficient

Aerovate Therapeutics  Ono Pharmaceutical

Good diversification

The 3 months correlation between Aerovate and Ono is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and Ono Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ono Pharmaceutical 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 Ono Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ono Pharmaceutical has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and Ono Pharmaceutical go up and down completely randomly.

Pair Corralation between Aerovate Therapeutics and Ono Pharmaceutical

Given the investment horizon of 90 days Aerovate Therapeutics is expected to generate 0.37 times more return on investment than Ono Pharmaceutical. However, Aerovate Therapeutics is 2.7 times less risky than Ono Pharmaceutical. It trades about -0.12 of its potential returns per unit of risk. Ono Pharmaceutical Co is currently generating about -0.07 per unit of risk. If you would invest  269.00  in Aerovate Therapeutics on December 2, 2024 and sell it today you would lose (26.00) from holding Aerovate Therapeutics or give up 9.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	45.0%
Values	Daily Returns

Aerovate Therapeutics  vs.  Ono Pharmaceutical Co

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 latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Ono Pharmaceutical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ono Pharmaceutical Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Ono Pharmaceutical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aerovate Therapeutics and Ono Pharmaceutical

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

The idea behind Aerovate Therapeutics and Ono Pharmaceutical Co 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.