Correlation Between Aerovate Therapeutics and Regen BioPharma

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

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

Diversification Opportunities for Aerovate Therapeutics and Regen BioPharma

0.13

Correlation Coefficient

Aerovate Therapeutics  Regen BioPharma

Average diversification

The 3 months correlation between Aerovate and Regen is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and Regen BioPharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regen BioPharma 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 Regen BioPharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regen BioPharma has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and Regen BioPharma go up and down completely randomly.

Pair Corralation between Aerovate Therapeutics and Regen BioPharma

Given the investment horizon of 90 days Aerovate Therapeutics is expected to under-perform the Regen BioPharma. But the stock apears to be less risky and, when comparing its historical volatility, Aerovate Therapeutics is 10.34 times less risky than Regen BioPharma. The stock trades about -0.04 of its potential returns per unit of risk. The Regen BioPharma is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6.21  in Regen BioPharma on December 28, 2024 and sell it today you would lose (1.19) from holding Regen BioPharma or give up 19.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Aerovate Therapeutics  vs.  Regen BioPharma

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Regen BioPharma

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Regen BioPharma are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental drivers, Regen BioPharma reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aerovate Therapeutics and Regen BioPharma

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

The idea behind Aerovate Therapeutics and Regen BioPharma 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.