Correlation Between Aura Biosciences and Aerovate Therapeutics
Can any of the company-specific risk be diversified away by investing in both Aura Biosciences 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 Aura Biosciences and Aerovate Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aura Biosciences and Aerovate Therapeutics, you can compare the effects of market volatilities on Aura Biosciences 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 Aura Biosciences with a short position of Aerovate Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aura Biosciences and Aerovate Therapeutics.
Diversification Opportunities for Aura Biosciences and Aerovate Therapeutics
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aura and Aerovate is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Aura Biosciences and Aerovate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerovate Therapeutics and Aura Biosciences 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 Aura Biosciences 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 Aura Biosciences i.e., Aura Biosciences and Aerovate Therapeutics go up and down completely randomly.
Pair Corralation between Aura Biosciences and Aerovate Therapeutics
Given the investment horizon of 90 days Aura Biosciences is expected to generate 1.86 times less return on investment than Aerovate Therapeutics. In addition to that, Aura Biosciences is 1.05 times more volatile than Aerovate Therapeutics. It trades about 0.08 of its total potential returns per unit of risk. Aerovate Therapeutics is currently generating about 0.15 per unit of volatility. If you would invest 195.00 in Aerovate Therapeutics on August 25, 2024 and sell it today you would earn a total of 71.00 from holding Aerovate Therapeutics or generate 36.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aura Biosciences vs. Aerovate Therapeutics
Performance |
| Timeline |
| Aura Biosciences |
| Aerovate Therapeutics |
Aura Biosciences and Aerovate Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aura Biosciences and Aerovate Therapeutics
The main advantage of trading using opposite Aura Biosciences and Aerovate Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aura Biosciences 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.| Aura Biosciences vs. Aerovate Therapeutics | Aura Biosciences vs. Adagene | Aura Biosciences vs. Acrivon Therapeutics, Common | Aura Biosciences vs. Rezolute |
| Aerovate Therapeutics vs. Eliem Therapeutics | Aerovate Therapeutics vs. HCW Biologics | Aerovate Therapeutics vs. RenovoRx | Aerovate Therapeutics vs. Tempest 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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