Correlation Between Alkame Holdings and Aerovate Therapeutics

Can any of the company-specific risk be diversified away by investing in both Alkame Holdings 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 Alkame Holdings and Aerovate Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alkame Holdings and Aerovate Therapeutics, you can compare the effects of market volatilities on Alkame Holdings 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 Alkame Holdings with a short position of Aerovate Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alkame Holdings and Aerovate Therapeutics.

Diversification Opportunities for Alkame Holdings and Aerovate Therapeutics

0.0

Correlation Coefficient

Alkame Holdings  Aerovate Therapeutics

Pay attention - limited upside

The 3 months correlation between Alkame and Aerovate is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alkame Holdings and Aerovate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerovate Therapeutics and Alkame Holdings 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 Alkame Holdings 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 Alkame Holdings i.e., Alkame Holdings and Aerovate Therapeutics go up and down completely randomly.

Pair Corralation between Alkame Holdings and Aerovate Therapeutics

If you would invest  188.00  in Aerovate Therapeutics on September 12, 2024 and sell it today you would earn a total of  75.00  from holding Aerovate Therapeutics or generate 39.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Alkame Holdings  vs.  Aerovate Therapeutics

Alkame Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alkame Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Alkame Holdings is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Aerovate Therapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aerovate Therapeutics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Aerovate Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alkame Holdings and Aerovate Therapeutics

The main advantage of trading using opposite Alkame Holdings and Aerovate Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alkame Holdings 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 Alkame Holdings 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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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.