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 525 13 MAR 26, 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

-0.57

Correlation Coefficient

Aerovate Therapeutics  NESNVX

Excellent diversification

The 3 months correlation between Aerovate and NESNVX is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and NESNVX 525 13 MAR 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESNVX 525 13 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 525 13 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 under-perform the NESNVX. In addition to that, Aerovate Therapeutics is 5.17 times more volatile than NESNVX 525 13 MAR 26. It trades about -0.14 of its total potential returns per unit of risk. NESNVX 525 13 MAR 26 is currently generating about -0.29 per unit of volatility. If you would invest  10,096  in NESNVX 525 13 MAR 26 on September 25, 2024 and sell it today you would lose (114.00) from holding NESNVX 525 13 MAR 26 or give up 1.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	65.0%
Values	Daily Returns

Aerovate Therapeutics  vs.  NESNVX 525 13 MAR 26

Aerovate Therapeutics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aerovate Therapeutics are ranked lower than 10 (%) 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.

NESNVX 525 13

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NESNVX 525 13 MAR 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NESNVX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the 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 525 13 MAR 26 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.