Correlation Between Aerovate Therapeutics and Sino Biopharmaceutica

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

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

Diversification Opportunities for Aerovate Therapeutics and Sino Biopharmaceutica

-0.14

Correlation Coefficient

Aerovate Therapeutics  Sino Biopharmaceutica

Good diversification

The 3 months correlation between Aerovate and Sino is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and Sino Biopharmaceutical Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino Biopharmaceutical 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 Sino Biopharmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino Biopharmaceutical has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and Sino Biopharmaceutica go up and down completely randomly.

Pair Corralation between Aerovate Therapeutics and Sino Biopharmaceutica

Given the investment horizon of 90 days Aerovate Therapeutics is expected to under-perform the Sino Biopharmaceutica. But the stock apears to be less risky and, when comparing its historical volatility, Aerovate Therapeutics is 1.46 times less risky than Sino Biopharmaceutica. The stock trades about -0.04 of its potential returns per unit of risk. The Sino Biopharmaceutical Ltd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  834.00  in Sino Biopharmaceutical Ltd on December 28, 2024 and sell it today you would earn a total of  104.00  from holding Sino Biopharmaceutical Ltd or generate 12.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Aerovate Therapeutics  vs.  Sino Biopharmaceutical Ltd

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.

Sino Biopharmaceutical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sino Biopharmaceutical Ltd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Sino Biopharmaceutica showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aerovate Therapeutics and Sino Biopharmaceutica

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

The idea behind Aerovate Therapeutics and Sino Biopharmaceutical Ltd 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.