Correlation Between Aerovate Therapeutics and Amylyx Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Aerovate Therapeutics and Amylyx Pharmaceuticals 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 Amylyx Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerovate Therapeutics and Amylyx Pharmaceuticals, you can compare the effects of market volatilities on Aerovate Therapeutics and Amylyx Pharmaceuticals 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 Amylyx Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerovate Therapeutics and Amylyx Pharmaceuticals.
Diversification Opportunities for Aerovate Therapeutics and Amylyx Pharmaceuticals
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aerovate and Amylyx is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and Amylyx Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amylyx Pharmaceuticals 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 Amylyx Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amylyx Pharmaceuticals has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and Amylyx Pharmaceuticals go up and down completely randomly.
Pair Corralation between Aerovate Therapeutics and Amylyx Pharmaceuticals
Given the investment horizon of 90 days Aerovate Therapeutics is expected to generate 0.75 times more return on investment than Amylyx Pharmaceuticals. However, Aerovate Therapeutics is 1.34 times less risky than Amylyx Pharmaceuticals. It trades about 0.24 of its potential returns per unit of risk. Amylyx Pharmaceuticals is currently generating about 0.08 per unit of risk. If you would invest 218.00 in Aerovate Therapeutics on August 28, 2024 and sell it today you would earn a total of 50.00 from holding Aerovate Therapeutics or generate 22.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aerovate Therapeutics vs. Amylyx Pharmaceuticals
Performance |
| Timeline |
| Aerovate Therapeutics |
| Amylyx Pharmaceuticals |
Aerovate Therapeutics and Amylyx Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aerovate Therapeutics and Amylyx Pharmaceuticals
The main advantage of trading using opposite Aerovate Therapeutics and Amylyx Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerovate Therapeutics position performs unexpectedly, Amylyx Pharmaceuticals 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 Amylyx Pharmaceuticals will offset losses from the drop in Amylyx Pharmaceuticals' long position.| Aerovate Therapeutics vs. Eliem Therapeutics | Aerovate Therapeutics vs. HCW Biologics | Aerovate Therapeutics vs. Scpharmaceuticals | Aerovate Therapeutics vs. Milestone Pharmaceuticals |
| Amylyx Pharmaceuticals vs. Terns Pharmaceuticals | Amylyx Pharmaceuticals vs. Acumen Pharmaceuticals | Amylyx Pharmaceuticals vs. Inozyme Pharma | Amylyx Pharmaceuticals vs. X4 Pharmaceuticals |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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