Correlation Between Aerovate Therapeutics and Lumos Pharma
Can any of the company-specific risk be diversified away by investing in both Aerovate Therapeutics and Lumos Pharma 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 Lumos Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerovate Therapeutics and Lumos Pharma, you can compare the effects of market volatilities on Aerovate Therapeutics and Lumos Pharma 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 Lumos Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerovate Therapeutics and Lumos Pharma.
Diversification Opportunities for Aerovate Therapeutics and Lumos Pharma
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aerovate and Lumos is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and Lumos Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumos Pharma 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 Lumos Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumos Pharma has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and Lumos Pharma go up and down completely randomly.
Pair Corralation between Aerovate Therapeutics and Lumos Pharma
Given the investment horizon of 90 days Aerovate Therapeutics is expected to under-perform the Lumos Pharma. In addition to that, Aerovate Therapeutics is 2.5 times more volatile than Lumos Pharma. It trades about -0.05 of its total potential returns per unit of risk. Lumos Pharma is currently generating about -0.05 per unit of volatility. If you would invest 442.00 in Lumos Pharma on September 4, 2024 and sell it today you would lose (4.00) from holding Lumos Pharma or give up 0.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aerovate Therapeutics vs. Lumos Pharma
Performance |
| Timeline |
| Aerovate Therapeutics |
| Lumos Pharma |
Aerovate Therapeutics and Lumos Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aerovate Therapeutics and Lumos Pharma
The main advantage of trading using opposite Aerovate Therapeutics and Lumos Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerovate Therapeutics position performs unexpectedly, Lumos Pharma 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 Lumos Pharma will offset losses from the drop in Lumos Pharma's long position.| Aerovate Therapeutics vs. Candel Therapeutics | Aerovate Therapeutics vs. Cingulate Warrants | Aerovate Therapeutics vs. Unicycive Therapeutics | Aerovate Therapeutics vs. Cardio Diagnostics Holdings |
| Lumos Pharma vs. Candel Therapeutics | Lumos Pharma vs. Cingulate Warrants | Lumos Pharma vs. Unicycive Therapeutics | Lumos Pharma vs. Cardio Diagnostics Holdings |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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