Correlation Between Aerovate Therapeutics and INTERNATIONAL

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

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

Diversification Opportunities for Aerovate Therapeutics and INTERNATIONAL

-0.3

Correlation Coefficient

Aerovate Therapeutics  INTERNATIONAL

Very good diversification

The 3 months correlation between Aerovate and INTERNATIONAL is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and INTERNATIONAL FLAVORS FRAGRANC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERNATIONAL FLAVORS 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 INTERNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERNATIONAL FLAVORS has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and INTERNATIONAL go up and down completely randomly.

Pair Corralation between Aerovate Therapeutics and INTERNATIONAL

Given the investment horizon of 90 days Aerovate Therapeutics is expected to under-perform the INTERNATIONAL. In addition to that, Aerovate Therapeutics is 2.53 times more volatile than INTERNATIONAL FLAVORS FRAGRANCES. It trades about -0.04 of its total potential returns per unit of risk. INTERNATIONAL FLAVORS FRAGRANCES is currently generating about 0.0 per unit of volatility. If you would invest  8,621  in INTERNATIONAL FLAVORS FRAGRANCES on December 28, 2024 and sell it today you would lose (26.00) from holding INTERNATIONAL FLAVORS FRAGRANCES or give up 0.3% 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.  INTERNATIONAL FLAVORS FRAGRANC

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.

INTERNATIONAL FLAVORS

Risk-Adjusted Performance

Very Weak

Over the last 90 days INTERNATIONAL FLAVORS FRAGRANCES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INTERNATIONAL is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aerovate Therapeutics and INTERNATIONAL

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

The idea behind Aerovate Therapeutics and INTERNATIONAL FLAVORS FRAGRANCES 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.