Correlation Between Bioatla and Aileron Therapeutics

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

By analyzing existing cross correlation between Bioatla and Aileron Therapeutics, you can compare the effects of market volatilities on Bioatla and Aileron Therapeutics 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 Bioatla with a short position of Aileron Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bioatla and Aileron Therapeutics.

Diversification Opportunities for Bioatla and Aileron Therapeutics

0.81

Correlation Coefficient

Bioatla  Aileron Therapeutics

Very poor diversification

The 3 months correlation between Bioatla and Aileron is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bioatla and Aileron Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aileron Therapeutics and Bioatla 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 Bioatla are associated (or correlated) with Aileron Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aileron Therapeutics has no effect on the direction of Bioatla i.e., Bioatla and Aileron Therapeutics go up and down completely randomly.

Pair Corralation between Bioatla and Aileron Therapeutics

Given the investment horizon of 90 days Bioatla is expected to under-perform the Aileron Therapeutics. In addition to that, Bioatla is 1.68 times more volatile than Aileron Therapeutics. It trades about -0.41 of its total potential returns per unit of risk. Aileron Therapeutics is currently generating about -0.01 per unit of volatility. If you would invest  235.00  in Aileron Therapeutics on October 5, 2024 and sell it today you would lose (10.00) from holding Aileron Therapeutics or give up 4.26% of portfolio value over 90 days.

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

Bioatla  vs.  Aileron Therapeutics

Bioatla

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aileron Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aileron Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bioatla and Aileron Therapeutics

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

The idea behind Bioatla and Aileron Therapeutics 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.