Correlation Between Viking Therapeutics and BioXcel Therapeutics
Can any of the company-specific risk be diversified away by investing in both Viking Therapeutics and BioXcel 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 Viking Therapeutics and BioXcel Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Viking Therapeutics and BioXcel Therapeutics, you can compare the effects of market volatilities on Viking Therapeutics and BioXcel 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 Viking Therapeutics with a short position of BioXcel Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viking Therapeutics and BioXcel Therapeutics.
Diversification Opportunities for Viking Therapeutics and BioXcel Therapeutics
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Viking and BioXcel is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Viking Therapeutics and BioXcel Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioXcel Therapeutics and Viking 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 Viking Therapeutics are associated (or correlated) with BioXcel Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioXcel Therapeutics has no effect on the direction of Viking Therapeutics i.e., Viking Therapeutics and BioXcel Therapeutics go up and down completely randomly.
Pair Corralation between Viking Therapeutics and BioXcel Therapeutics
Given the investment horizon of 90 days Viking Therapeutics is expected to under-perform the BioXcel Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Viking Therapeutics is 1.58 times less risky than BioXcel Therapeutics. The stock trades about -0.09 of its potential returns per unit of risk. The BioXcel Therapeutics is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 62.00 in BioXcel Therapeutics on November 2, 2024 and sell it today you would lose (30.00) from holding BioXcel Therapeutics or give up 48.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Viking Therapeutics vs. BioXcel Therapeutics
Performance |
| Timeline |
| Viking Therapeutics |
| BioXcel Therapeutics |
Viking Therapeutics and BioXcel Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Viking Therapeutics and BioXcel Therapeutics
The main advantage of trading using opposite Viking Therapeutics and BioXcel Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viking Therapeutics position performs unexpectedly, BioXcel 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 BioXcel Therapeutics will offset losses from the drop in BioXcel Therapeutics' long position.| Viking Therapeutics vs. Terns Pharmaceuticals | Viking Therapeutics vs. Akero Therapeutics | Viking Therapeutics vs. Madrigal Pharmaceuticals | Viking Therapeutics vs. Sarepta Therapeutics |
| BioXcel Therapeutics vs. Terns Pharmaceuticals | BioXcel Therapeutics vs. Amylyx Pharmaceuticals | BioXcel Therapeutics vs. Acumen Pharmaceuticals | BioXcel Therapeutics vs. Inozyme Pharma |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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