Correlation Between Aerovate Therapeutics and Adagene
Can any of the company-specific risk be diversified away by investing in both Aerovate Therapeutics and Adagene 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 Adagene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerovate Therapeutics and Adagene, you can compare the effects of market volatilities on Aerovate Therapeutics and Adagene 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 Adagene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerovate Therapeutics and Adagene.
Diversification Opportunities for Aerovate Therapeutics and Adagene
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aerovate and Adagene is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and Adagene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adagene 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 Adagene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adagene has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and Adagene go up and down completely randomly.
Pair Corralation between Aerovate Therapeutics and Adagene
Given the investment horizon of 90 days Aerovate Therapeutics is expected to generate 0.76 times more return on investment than Adagene. However, Aerovate Therapeutics is 1.31 times less risky than Adagene. It trades about -0.04 of its potential returns per unit of risk. Adagene is currently generating about -0.16 per unit of risk. If you would invest 269.00 in Aerovate Therapeutics on November 2, 2024 and sell it today you would lose (7.00) from holding Aerovate Therapeutics or give up 2.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aerovate Therapeutics vs. Adagene
Performance |
| Timeline |
| Aerovate Therapeutics |
| Adagene |
Aerovate Therapeutics and Adagene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aerovate Therapeutics and Adagene
The main advantage of trading using opposite Aerovate Therapeutics and Adagene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerovate Therapeutics position performs unexpectedly, Adagene 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 Adagene will offset losses from the drop in Adagene's long position.| Aerovate Therapeutics vs. Adagene | Aerovate Therapeutics vs. Acrivon Therapeutics, Common | Aerovate Therapeutics vs. Rezolute | Aerovate Therapeutics vs. AN2 Therapeutics |
| Adagene vs. Aerovate Therapeutics | Adagene vs. Acrivon Therapeutics, Common | Adagene vs. Rezolute | Adagene 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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