Correlation Between Cardano and Aerovate Therapeutics
Can any of the company-specific risk be diversified away by investing in both Cardano 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 Cardano and Aerovate Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardano and Aerovate Therapeutics, you can compare the effects of market volatilities on Cardano 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 Cardano with a short position of Aerovate Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardano and Aerovate Therapeutics.
Diversification Opportunities for Cardano and Aerovate Therapeutics
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cardano and Aerovate is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Aerovate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerovate Therapeutics and Cardano 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 Cardano 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 Cardano i.e., Cardano and Aerovate Therapeutics go up and down completely randomly.
Pair Corralation between Cardano and Aerovate Therapeutics
Assuming the 90 days trading horizon Cardano is expected to generate 3.19 times more return on investment than Aerovate Therapeutics. However, Cardano is 3.19 times more volatile than Aerovate Therapeutics. It trades about 0.16 of its potential returns per unit of risk. Aerovate Therapeutics is currently generating about 0.06 per unit of risk. If you would invest 95.00 in Cardano on October 20, 2024 and sell it today you would earn a total of 19.00 from holding Cardano or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Cardano vs. Aerovate Therapeutics
Performance |
| Timeline |
| Cardano |
| Aerovate Therapeutics |
Cardano and Aerovate Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardano and Aerovate Therapeutics
The main advantage of trading using opposite Cardano and Aerovate Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardano 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 Cardano 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.| Aerovate Therapeutics vs. Adagene | Aerovate Therapeutics vs. Acrivon Therapeutics, Common | Aerovate Therapeutics vs. Rezolute | Aerovate Therapeutics vs. AN2 Therapeutics |
Check out your portfolio center.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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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