Correlation Between Aurinia Pharmaceuticals and Viking Therapeutics
Can any of the company-specific risk be diversified away by investing in both Aurinia Pharmaceuticals and Viking 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 Aurinia Pharmaceuticals and Viking Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurinia Pharmaceuticals and Viking Therapeutics, you can compare the effects of market volatilities on Aurinia Pharmaceuticals and Viking 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 Aurinia Pharmaceuticals with a short position of Viking Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurinia Pharmaceuticals and Viking Therapeutics.
Diversification Opportunities for Aurinia Pharmaceuticals and Viking Therapeutics
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aurinia and Viking is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Aurinia Pharmaceuticals and Viking Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viking Therapeutics and Aurinia Pharmaceuticals 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 Aurinia Pharmaceuticals are associated (or correlated) with Viking Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viking Therapeutics has no effect on the direction of Aurinia Pharmaceuticals i.e., Aurinia Pharmaceuticals and Viking Therapeutics go up and down completely randomly.
Pair Corralation between Aurinia Pharmaceuticals and Viking Therapeutics
Given the investment horizon of 90 days Aurinia Pharmaceuticals is expected to generate 34.79 times less return on investment than Viking Therapeutics. But when comparing it to its historical volatility, Aurinia Pharmaceuticals is 2.71 times less risky than Viking Therapeutics. It trades about 0.01 of its potential returns per unit of risk. Viking Therapeutics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,416 in Viking Therapeutics on August 29, 2024 and sell it today you would earn a total of 4,035 from holding Viking Therapeutics or generate 284.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurinia Pharmaceuticals vs. Viking Therapeutics
Performance |
| Timeline |
| Aurinia Pharmaceuticals |
| Viking Therapeutics |
Aurinia Pharmaceuticals and Viking Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurinia Pharmaceuticals and Viking Therapeutics
The main advantage of trading using opposite Aurinia Pharmaceuticals and Viking Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurinia Pharmaceuticals position performs unexpectedly, Viking 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 Viking Therapeutics will offset losses from the drop in Viking Therapeutics' long position.| Aurinia Pharmaceuticals vs. Viking Therapeutics | Aurinia Pharmaceuticals vs. Axsome Therapeutics | Aurinia Pharmaceuticals vs. Madrigal Pharmaceuticals | Aurinia Pharmaceuticals vs. Seres Therapeutics |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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