Correlation Between Sol Gel and Aerovate Therapeutics
Can any of the company-specific risk be diversified away by investing in both Sol Gel 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 Sol Gel and Aerovate Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sol Gel Technologies and Aerovate Therapeutics, you can compare the effects of market volatilities on Sol Gel 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 Sol Gel with a short position of Aerovate Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sol Gel and Aerovate Therapeutics.
Diversification Opportunities for Sol Gel and Aerovate Therapeutics
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sol and Aerovate is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sol Gel Technologies and Aerovate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerovate Therapeutics and Sol Gel 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 Sol Gel Technologies 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 Sol Gel i.e., Sol Gel and Aerovate Therapeutics go up and down completely randomly.
Pair Corralation between Sol Gel and Aerovate Therapeutics
Given the investment horizon of 90 days Sol Gel Technologies is expected to generate 57.17 times more return on investment than Aerovate Therapeutics. However, Sol Gel is 57.17 times more volatile than Aerovate Therapeutics. It trades about 0.21 of its potential returns per unit of risk. Aerovate Therapeutics is currently generating about -0.01 per unit of risk. If you would invest 47.00 in Sol Gel Technologies on October 15, 2024 and sell it today you would earn a total of 58.00 from holding Sol Gel Technologies or generate 123.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Sol Gel Technologies vs. Aerovate Therapeutics
Performance |
| Timeline |
| Sol Gel Technologies |
| Aerovate Therapeutics |
Sol Gel and Aerovate Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sol Gel and Aerovate Therapeutics
The main advantage of trading using opposite Sol Gel and Aerovate Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sol Gel 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 Sol Gel Technologies 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.| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |