Correlation Between Aerovate Therapeutics and Kongsberg Automotive
Can any of the company-specific risk be diversified away by investing in both Aerovate Therapeutics and Kongsberg Automotive 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 Kongsberg Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerovate Therapeutics and Kongsberg Automotive ASA, you can compare the effects of market volatilities on Aerovate Therapeutics and Kongsberg Automotive 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 Kongsberg Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerovate Therapeutics and Kongsberg Automotive.
Diversification Opportunities for Aerovate Therapeutics and Kongsberg Automotive
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aerovate and Kongsberg is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and Kongsberg Automotive ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kongsberg Automotive ASA 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 Kongsberg Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kongsberg Automotive ASA has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and Kongsberg Automotive go up and down completely randomly.
Pair Corralation between Aerovate Therapeutics and Kongsberg Automotive
Given the investment horizon of 90 days Aerovate Therapeutics is expected to generate 1.63 times more return on investment than Kongsberg Automotive. However, Aerovate Therapeutics is 1.63 times more volatile than Kongsberg Automotive ASA. It trades about 0.0 of its potential returns per unit of risk. Kongsberg Automotive ASA is currently generating about -0.01 per unit of risk. If you would invest 2,285 in Aerovate Therapeutics on October 22, 2024 and sell it today you would lose (2,027) from holding Aerovate Therapeutics or give up 88.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Aerovate Therapeutics vs. Kongsberg Automotive ASA
Performance |
| Timeline |
| Aerovate Therapeutics |
| Kongsberg Automotive ASA |
Aerovate Therapeutics and Kongsberg Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aerovate Therapeutics and Kongsberg Automotive
The main advantage of trading using opposite Aerovate Therapeutics and Kongsberg Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerovate Therapeutics position performs unexpectedly, Kongsberg Automotive 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 Kongsberg Automotive will offset losses from the drop in Kongsberg Automotive's long position.| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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