Correlation Between Aerovate Therapeutics and NESNVX

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

By analyzing existing cross correlation between Aerovate Therapeutics and NESNVX 125 15 SEP 30, you can compare the effects of market volatilities on Aerovate Therapeutics and NESNVX 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 NESNVX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerovate Therapeutics and NESNVX.

Diversification Opportunities for Aerovate Therapeutics and NESNVX

0.74

Correlation Coefficient

Aerovate Therapeutics  NESNVX

Poor diversification

The 3 months correlation between Aerovate and NESNVX is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and NESNVX 125 15 SEP 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESNVX 125 15 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 NESNVX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESNVX 125 15 has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and NESNVX go up and down completely randomly.

Pair Corralation between Aerovate Therapeutics and NESNVX

Given the investment horizon of 90 days Aerovate Therapeutics is expected to generate 10.89 times more return on investment than NESNVX. However, Aerovate Therapeutics is 10.89 times more volatile than NESNVX 125 15 SEP 30. It trades about 0.01 of its potential returns per unit of risk. NESNVX 125 15 SEP 30 is currently generating about 0.03 per unit of risk. If you would invest  1,599  in Aerovate Therapeutics on September 21, 2024 and sell it today you would lose (1,346) from holding Aerovate Therapeutics or give up 84.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	33.09%
Values	Daily Returns

Aerovate Therapeutics  vs.  NESNVX 125 15 SEP 30

Aerovate Therapeutics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aerovate Therapeutics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Aerovate Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

NESNVX 125 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NESNVX 125 15 SEP 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for NESNVX 125 15 SEP 30 investors.

Pair Trading with Aerovate Therapeutics and NESNVX

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

The idea behind Aerovate Therapeutics and NESNVX 125 15 SEP 30 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.