Correlation Between Aerovate Therapeutics and ATMOS

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

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

Diversification Opportunities for Aerovate Therapeutics and ATMOS

-0.59

Correlation Coefficient

Aerovate Therapeutics  ATMOS

Excellent diversification

The 3 months correlation between Aerovate and ATMOS is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and ATMOS ENERGY P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATMOS ENERGY P and Aerovate Therapeutics 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 Aerovate Therapeutics are associated (or correlated) with ATMOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATMOS ENERGY P has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and ATMOS go up and down completely randomly.

Pair Corralation between Aerovate Therapeutics and ATMOS

Given the investment horizon of 90 days Aerovate Therapeutics is expected to under-perform the ATMOS. But the stock apears to be less risky and, when comparing its historical volatility, Aerovate Therapeutics is 11.81 times less risky than ATMOS. The stock trades about -0.01 of its potential returns per unit of risk. The ATMOS ENERGY P is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  8,262  in ATMOS ENERGY P on September 20, 2024 and sell it today you would lose (86.00) from holding ATMOS ENERGY P or give up 1.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	78.63%
Values	Daily Returns

Aerovate Therapeutics  vs.  ATMOS ENERGY P

Aerovate Therapeutics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aerovate Therapeutics are ranked lower than 11 (%) 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.

ATMOS ENERGY P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATMOS ENERGY P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ATMOS ENERGY P investors.

Pair Trading with Aerovate Therapeutics and ATMOS

The main advantage of trading using opposite Aerovate Therapeutics and ATMOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerovate Therapeutics position performs unexpectedly, ATMOS 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 ATMOS will offset losses from the drop in ATMOS's long position.

The idea behind Aerovate Therapeutics and ATMOS ENERGY P 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.