Correlation Between Puma Biotechnology and Aerovate Therapeutics
Can any of the company-specific risk be diversified away by investing in both Puma Biotechnology 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 Puma Biotechnology and Aerovate Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Puma Biotechnology and Aerovate Therapeutics, you can compare the effects of market volatilities on Puma Biotechnology 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 Puma Biotechnology with a short position of Aerovate Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puma Biotechnology and Aerovate Therapeutics.
Diversification Opportunities for Puma Biotechnology and Aerovate Therapeutics
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Puma and Aerovate is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Puma Biotechnology and Aerovate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerovate Therapeutics and Puma Biotechnology 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 Puma Biotechnology 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 Puma Biotechnology i.e., Puma Biotechnology and Aerovate Therapeutics go up and down completely randomly.
Pair Corralation between Puma Biotechnology and Aerovate Therapeutics
Given the investment horizon of 90 days Puma Biotechnology is expected to generate 1.62 times less return on investment than Aerovate Therapeutics. In addition to that, Puma Biotechnology is 1.24 times more volatile than Aerovate Therapeutics. It trades about 0.07 of its total potential returns per unit of risk. Aerovate Therapeutics is currently generating about 0.14 per unit of volatility. If you would invest 191.00 in Aerovate Therapeutics on September 16, 2024 and sell it today you would earn a total of 62.00 from holding Aerovate Therapeutics or generate 32.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Puma Biotechnology vs. Aerovate Therapeutics
Performance |
| Timeline |
| Puma Biotechnology |
| Aerovate Therapeutics |
Puma Biotechnology and Aerovate Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Puma Biotechnology and Aerovate Therapeutics
The main advantage of trading using opposite Puma Biotechnology and Aerovate Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Puma Biotechnology 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.| Puma Biotechnology vs. Ultragenyx | Puma Biotechnology vs. Crinetics Pharmaceuticals | Puma Biotechnology vs. Arvinas | Puma Biotechnology vs. Revolution Medicines |
| Aerovate Therapeutics vs. Puma Biotechnology | Aerovate Therapeutics vs. Iovance Biotherapeutics | Aerovate Therapeutics vs. Zentalis Pharmaceuticals Llc | Aerovate Therapeutics vs. Syndax Pharmaceuticals |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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