Correlation Between Biocardia and Aerovate Therapeutics
Can any of the company-specific risk be diversified away by investing in both Biocardia and Aerovate Therapeutics 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 Biocardia and Aerovate Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biocardia and Aerovate Therapeutics, you can compare the effects of market volatilities on Biocardia and Aerovate Therapeutics 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 Biocardia with a short position of Aerovate Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biocardia and Aerovate Therapeutics.
Diversification Opportunities for Biocardia and Aerovate Therapeutics
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Biocardia and Aerovate is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Biocardia and Aerovate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerovate Therapeutics and Biocardia 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 Biocardia are associated (or correlated) with Aerovate Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerovate Therapeutics has no effect on the direction of Biocardia i.e., Biocardia and Aerovate Therapeutics go up and down completely randomly.
Pair Corralation between Biocardia and Aerovate Therapeutics
Given the investment horizon of 90 days Biocardia is expected to under-perform the Aerovate Therapeutics. In addition to that, Biocardia is 1.72 times more volatile than Aerovate Therapeutics. It trades about -0.01 of its total potential returns per unit of risk. Aerovate Therapeutics is currently generating about 0.0 per unit of volatility. If you would invest 2,360 in Aerovate Therapeutics on November 2, 2024 and sell it today you would lose (2,098) from holding Aerovate Therapeutics or give up 88.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biocardia vs. Aerovate Therapeutics
Performance |
| Timeline |
| Biocardia |
| Aerovate Therapeutics |
Biocardia and Aerovate Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biocardia and Aerovate Therapeutics
The main advantage of trading using opposite Biocardia and Aerovate Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biocardia position performs unexpectedly, Aerovate Therapeutics 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 Aerovate Therapeutics will offset losses from the drop in Aerovate Therapeutics' long position.| Biocardia vs. Aerovate Therapeutics | Biocardia vs. Adagene | Biocardia vs. Acrivon Therapeutics, Common | Biocardia vs. Rezolute |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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