Correlation Between Aerovate Therapeutics and Universal Media
Can any of the company-specific risk be diversified away by investing in both Aerovate Therapeutics and Universal Media 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 Universal Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerovate Therapeutics and Universal Media Group, you can compare the effects of market volatilities on Aerovate Therapeutics and Universal Media 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 Universal Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerovate Therapeutics and Universal Media.
Diversification Opportunities for Aerovate Therapeutics and Universal Media
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aerovate and Universal is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and Universal Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Media Group 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 Universal Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Media Group has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and Universal Media go up and down completely randomly.
Pair Corralation between Aerovate Therapeutics and Universal Media
Given the investment horizon of 90 days Aerovate Therapeutics is expected to under-perform the Universal Media. But the stock apears to be less risky and, when comparing its historical volatility, Aerovate Therapeutics is 12.7 times less risky than Universal Media. The stock trades about -0.04 of its potential returns per unit of risk. The Universal Media Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4.20 in Universal Media Group on September 13, 2024 and sell it today you would lose (1.20) from holding Universal Media Group or give up 28.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aerovate Therapeutics vs. Universal Media Group
Performance |
| Timeline |
| Aerovate Therapeutics |
| Universal Media Group |
Aerovate Therapeutics and Universal Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aerovate Therapeutics and Universal Media
The main advantage of trading using opposite Aerovate Therapeutics and Universal Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerovate Therapeutics position performs unexpectedly, Universal Media 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 Universal Media will offset losses from the drop in Universal Media's long position.| Aerovate Therapeutics vs. Adagene | Aerovate Therapeutics vs. Acrivon Therapeutics, Common | Aerovate Therapeutics vs. Rezolute | Aerovate Therapeutics vs. AN2 Therapeutics |
| Universal Media vs. Mangazeya Mining | Universal Media vs. ATRenew Inc DRC | Universal Media vs. Simon Property Group | Universal Media vs. Evolution Mining |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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