Correlation Between PeptiDream and Aerovate Therapeutics
Can any of the company-specific risk be diversified away by investing in both PeptiDream 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 PeptiDream and Aerovate Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PeptiDream and Aerovate Therapeutics, you can compare the effects of market volatilities on PeptiDream 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 PeptiDream with a short position of Aerovate Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of PeptiDream and Aerovate Therapeutics.
Diversification Opportunities for PeptiDream and Aerovate Therapeutics
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PeptiDream and Aerovate is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding PeptiDream and Aerovate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerovate Therapeutics and PeptiDream 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 PeptiDream 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 PeptiDream i.e., PeptiDream and Aerovate Therapeutics go up and down completely randomly.
Pair Corralation between PeptiDream and Aerovate Therapeutics
Assuming the 90 days horizon PeptiDream is expected to generate 0.54 times more return on investment than Aerovate Therapeutics. However, PeptiDream is 1.85 times less risky than Aerovate Therapeutics. It trades about 0.04 of its potential returns per unit of risk. Aerovate Therapeutics is currently generating about 0.0 per unit of risk. If you would invest 1,210 in PeptiDream on September 3, 2024 and sell it today you would earn a total of 490.00 from holding PeptiDream or generate 40.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 92.73% |
| Values | Daily Returns |
PeptiDream vs. Aerovate Therapeutics
Performance |
| Timeline |
| PeptiDream |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Aerovate Therapeutics |
PeptiDream and Aerovate Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PeptiDream and Aerovate Therapeutics
The main advantage of trading using opposite PeptiDream and Aerovate Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PeptiDream 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.| PeptiDream vs. Innovent Biologics | PeptiDream vs. Telix Pharmaceuticals Limited | PeptiDream vs. Keros Therapeutics | PeptiDream vs. MAIA Biotechnology |
| Aerovate Therapeutics vs. DiaMedica Therapeutics | Aerovate Therapeutics vs. Lyra Therapeutics | Aerovate Therapeutics vs. Centessa Pharmaceuticals PLC |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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