Correlation Between Aerovate Therapeutics and SOUTHERN

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

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

Diversification Opportunities for Aerovate Therapeutics and SOUTHERN

-0.63

Correlation Coefficient

Aerovate Therapeutics  SOUTHERN

Excellent diversification

The 3 months correlation between Aerovate and SOUTHERN is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and SOUTHERN PER CORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHERN PER P 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 SOUTHERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOUTHERN PER P has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and SOUTHERN go up and down completely randomly.

Pair Corralation between Aerovate Therapeutics and SOUTHERN

Given the investment horizon of 90 days Aerovate Therapeutics is expected to generate 1.41 times less return on investment than SOUTHERN. In addition to that, Aerovate Therapeutics is 1.66 times more volatile than SOUTHERN PER CORP. It trades about 0.04 of its total potential returns per unit of risk. SOUTHERN PER CORP is currently generating about 0.09 per unit of volatility. If you would invest  9,193  in SOUTHERN PER CORP on September 19, 2024 and sell it today you would earn a total of  202.00  from holding SOUTHERN PER CORP or generate 2.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Aerovate Therapeutics  vs.  SOUTHERN PER CORP

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 fragile basic indicators, Aerovate Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

SOUTHERN PER P

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aerovate Therapeutics and SOUTHERN

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

The idea behind Aerovate Therapeutics and SOUTHERN PER CORP 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.