Correlation Between Aerovate Therapeutics and Syndax Pharmaceuticals

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

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

Diversification Opportunities for Aerovate Therapeutics and Syndax Pharmaceuticals

-0.26

Correlation Coefficient

Aerovate Therapeutics  Syndax Pharmaceuticals

Very good diversification

The 3 months correlation between Aerovate and Syndax is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and Syndax Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Syndax Pharmaceuticals 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 Syndax Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Syndax Pharmaceuticals has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and Syndax Pharmaceuticals go up and down completely randomly.

Pair Corralation between Aerovate Therapeutics and Syndax Pharmaceuticals

Given the investment horizon of 90 days Aerovate Therapeutics is expected to under-perform the Syndax Pharmaceuticals. In addition to that, Aerovate Therapeutics is 2.02 times more volatile than Syndax Pharmaceuticals. It trades about -0.01 of its total potential returns per unit of risk. Syndax Pharmaceuticals is currently generating about -0.01 per unit of volatility. If you would invest  2,369  in Syndax Pharmaceuticals on August 31, 2024 and sell it today you would lose (718.00) from holding Syndax Pharmaceuticals or give up 30.31% of portfolio value over 90 days.

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

Aerovate Therapeutics  vs.  Syndax Pharmaceuticals

Aerovate Therapeutics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aerovate Therapeutics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Aerovate Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Syndax Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Syndax Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aerovate Therapeutics and Syndax Pharmaceuticals

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

The idea behind Aerovate Therapeutics and Syndax Pharmaceuticals 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.