Correlation Between MoonLake Immunotherapeuti and Aerovate Therapeutics
Can any of the company-specific risk be diversified away by investing in both MoonLake Immunotherapeuti 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 MoonLake Immunotherapeuti and Aerovate Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MoonLake Immunotherapeutics and Aerovate Therapeutics, you can compare the effects of market volatilities on MoonLake Immunotherapeuti 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 MoonLake Immunotherapeuti with a short position of Aerovate Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of MoonLake Immunotherapeuti and Aerovate Therapeutics.
Diversification Opportunities for MoonLake Immunotherapeuti and Aerovate Therapeutics
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MoonLake and Aerovate is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding MoonLake Immunotherapeutics and Aerovate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerovate Therapeutics and MoonLake Immunotherapeuti 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 MoonLake Immunotherapeutics 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 MoonLake Immunotherapeuti i.e., MoonLake Immunotherapeuti and Aerovate Therapeutics go up and down completely randomly.
Pair Corralation between MoonLake Immunotherapeuti and Aerovate Therapeutics
Given the investment horizon of 90 days MoonLake Immunotherapeutics is expected to under-perform the Aerovate Therapeutics. In addition to that, MoonLake Immunotherapeuti is 1.35 times more volatile than Aerovate Therapeutics. It trades about -0.21 of its total potential returns per unit of risk. Aerovate Therapeutics is currently generating about -0.04 per unit of volatility. If you would invest 269.00 in Aerovate Therapeutics on November 3, 2024 and sell it today you would lose (7.00) from holding Aerovate Therapeutics or give up 2.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MoonLake Immunotherapeutics vs. Aerovate Therapeutics
Performance |
| Timeline |
| MoonLake Immunotherapeuti |
| Aerovate Therapeutics |
MoonLake Immunotherapeuti and Aerovate Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MoonLake Immunotherapeuti and Aerovate Therapeutics
The main advantage of trading using opposite MoonLake Immunotherapeuti and Aerovate Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MoonLake Immunotherapeuti 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.The idea behind MoonLake Immunotherapeutics and Aerovate Therapeutics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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