Correlation Between Structure Therapeutics and Aerovate Therapeutics
Can any of the company-specific risk be diversified away by investing in both Structure Therapeutics 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 Structure Therapeutics and Aerovate Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Structure Therapeutics American and Aerovate Therapeutics, you can compare the effects of market volatilities on Structure Therapeutics 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 Structure Therapeutics with a short position of Aerovate Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Structure Therapeutics and Aerovate Therapeutics.
Diversification Opportunities for Structure Therapeutics and Aerovate Therapeutics
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Structure and Aerovate is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Structure Therapeutics America and Aerovate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerovate Therapeutics and Structure 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 Structure Therapeutics American 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 Structure Therapeutics i.e., Structure Therapeutics and Aerovate Therapeutics go up and down completely randomly.
Pair Corralation between Structure Therapeutics and Aerovate Therapeutics
Given the investment horizon of 90 days Structure Therapeutics American is expected to under-perform the Aerovate Therapeutics. In addition to that, Structure Therapeutics is 3.62 times more volatile than Aerovate Therapeutics. It trades about -0.19 of its total potential returns per unit of risk. Aerovate Therapeutics is currently generating about 0.17 per unit of volatility. If you would invest 243.00 in Aerovate Therapeutics on December 30, 2024 and sell it today you would earn a total of 10.00 from holding Aerovate Therapeutics or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Structure Therapeutics America vs. Aerovate Therapeutics
Performance |
| Timeline |
| Structure Therapeutics |
| Aerovate Therapeutics |
Structure Therapeutics and Aerovate Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Structure Therapeutics and Aerovate Therapeutics
The main advantage of trading using opposite Structure Therapeutics and Aerovate Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Structure Therapeutics 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.| Structure Therapeutics vs. Day One Biopharmaceuticals | ||
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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