Correlation Between Senti Biosciences and Aerovate Therapeutics
Can any of the company-specific risk be diversified away by investing in both Senti Biosciences 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 Senti Biosciences and Aerovate Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Senti Biosciences and Aerovate Therapeutics, you can compare the effects of market volatilities on Senti Biosciences 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 Senti Biosciences with a short position of Aerovate Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senti Biosciences and Aerovate Therapeutics.
Diversification Opportunities for Senti Biosciences and Aerovate Therapeutics
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Senti and Aerovate is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Senti Biosciences and Aerovate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerovate Therapeutics and Senti Biosciences 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 Senti Biosciences 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 Senti Biosciences i.e., Senti Biosciences and Aerovate Therapeutics go up and down completely randomly.
Pair Corralation between Senti Biosciences and Aerovate Therapeutics
Given the investment horizon of 90 days Senti Biosciences is expected to under-perform the Aerovate Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Senti Biosciences is 1.37 times less risky than Aerovate Therapeutics. The stock trades about -0.02 of its potential returns per unit of risk. The Aerovate Therapeutics is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 218.00 in Aerovate Therapeutics on August 28, 2024 and sell it today you would earn a total of 50.00 from holding Aerovate Therapeutics or generate 22.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Senti Biosciences vs. Aerovate Therapeutics
Performance |
| Timeline |
| Senti Biosciences |
| Aerovate Therapeutics |
Senti Biosciences and Aerovate Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Senti Biosciences and Aerovate Therapeutics
The main advantage of trading using opposite Senti Biosciences and Aerovate Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senti Biosciences 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.| Senti Biosciences vs. Cadrenal Therapeutics, Common | Senti Biosciences vs. Foghorn Therapeutics | Senti Biosciences vs. Quoin Pharmaceuticals Ltd | Senti Biosciences vs. SAB Biotherapeutics |
| Aerovate Therapeutics vs. Eliem Therapeutics | Aerovate Therapeutics vs. Scpharmaceuticals | Aerovate Therapeutics vs. Milestone Pharmaceuticals | Aerovate Therapeutics vs. Seres 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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