Correlation Between Equillium and Viking Therapeutics
Can any of the company-specific risk be diversified away by investing in both Equillium 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 Equillium and Viking Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equillium and Viking Therapeutics, you can compare the effects of market volatilities on Equillium 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 Equillium with a short position of Viking Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equillium and Viking Therapeutics.
Diversification Opportunities for Equillium and Viking Therapeutics
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Equillium and Viking is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Viking Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viking Therapeutics and Equillium 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 Equillium 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 Equillium i.e., Equillium and Viking Therapeutics go up and down completely randomly.
Pair Corralation between Equillium and Viking Therapeutics
Allowing for the 90-day total investment horizon Equillium is expected to generate 1.18 times more return on investment than Viking Therapeutics. However, Equillium is 1.18 times more volatile than Viking Therapeutics. It trades about 0.09 of its potential returns per unit of risk. Viking Therapeutics is currently generating about -0.3 per unit of risk. If you would invest 60.00 in Equillium on October 20, 2024 and sell it today you would earn a total of 4.00 from holding Equillium or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equillium vs. Viking Therapeutics
Performance |
| Timeline |
| Equillium |
| Viking Therapeutics |
Equillium and Viking Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equillium and Viking Therapeutics
The main advantage of trading using opposite Equillium and Viking Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equillium 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.| Equillium vs. Lyra Therapeutics | Equillium vs. Hookipa Pharma | Equillium vs. Jasper Therapeutics | Equillium vs. Cingulate Warrants |
| Viking Therapeutics vs. Agilent Technologies | Viking Therapeutics vs. Equillium | Viking Therapeutics vs. 23Andme Holding Co | Viking Therapeutics vs. DiaMedica 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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