Correlation Between Golden Agri and Aerovate Therapeutics

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

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

Diversification Opportunities for Golden Agri and Aerovate Therapeutics

-0.07

Correlation Coefficient

Golden Agri  Aerovate Therapeutics

Good diversification

The 3 months correlation between Golden and Aerovate is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Golden Agri Resources and Aerovate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerovate Therapeutics and Golden Agri 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 Golden Agri Resources are associated (or correlated) with Aerovate Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerovate Therapeutics has no effect on the direction of Golden Agri i.e., Golden Agri and Aerovate Therapeutics go up and down completely randomly.

Pair Corralation between Golden Agri and Aerovate Therapeutics

Assuming the 90 days horizon Golden Agri Resources is expected to under-perform the Aerovate Therapeutics. But the pink sheet apears to be less risky and, when comparing its historical volatility, Golden Agri Resources is 3.44 times less risky than Aerovate Therapeutics. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Aerovate Therapeutics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  234.00  in Aerovate Therapeutics on October 20, 2024 and sell it today you would earn a total of  24.00  from holding Aerovate Therapeutics or generate 10.26% return on investment over 90 days.

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

Golden Agri Resources  vs.  Aerovate Therapeutics

Golden Agri Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Agri Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Golden Agri is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Aerovate Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aerovate Therapeutics are ranked lower than 5 (%) 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.

Pair Trading with Golden Agri and Aerovate Therapeutics

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

The idea behind Golden Agri Resources and Aerovate 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.