Correlation Between Aerovate Therapeutics and LOCKHEED

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

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

Diversification Opportunities for Aerovate Therapeutics and LOCKHEED

-0.39

Correlation Coefficient

Aerovate Therapeutics  LOCKHEED

Very good diversification

The 3 months correlation between Aerovate and LOCKHEED is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and LOCKHEED MARTIN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOCKHEED MARTIN 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 LOCKHEED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOCKHEED MARTIN P has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and LOCKHEED go up and down completely randomly.

Pair Corralation between Aerovate Therapeutics and LOCKHEED

Given the investment horizon of 90 days Aerovate Therapeutics is expected to generate 4.39 times more return on investment than LOCKHEED. However, Aerovate Therapeutics is 4.39 times more volatile than LOCKHEED MARTIN P. It trades about 0.14 of its potential returns per unit of risk. LOCKHEED MARTIN P is currently generating about -0.17 per unit of risk. If you would invest  191.00  in Aerovate Therapeutics on September 14, 2024 and sell it today you would earn a total of  62.00  from holding Aerovate Therapeutics or generate 32.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Aerovate Therapeutics  vs.  LOCKHEED MARTIN P

Aerovate Therapeutics

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aerovate Therapeutics are ranked lower than 10 (%) 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.

LOCKHEED MARTIN P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LOCKHEED MARTIN P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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 LOCKHEED MARTIN P investors.

Pair Trading with Aerovate Therapeutics and LOCKHEED

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

The idea behind Aerovate Therapeutics and LOCKHEED MARTIN 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.