Correlation Between Tonix Pharmaceuticals and Ardelyx

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

By analyzing existing cross correlation between Tonix Pharmaceuticals Holding and Ardelyx, you can compare the effects of market volatilities on Tonix Pharmaceuticals and Ardelyx 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 Tonix Pharmaceuticals with a short position of Ardelyx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tonix Pharmaceuticals and Ardelyx.

Diversification Opportunities for Tonix Pharmaceuticals and Ardelyx

-0.48

Correlation Coefficient

Tonix Pharmaceuticals  Ardelyx

Very good diversification

The 3 months correlation between Tonix and Ardelyx is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Tonix Pharmaceuticals Holding and Ardelyx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardelyx and Tonix 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 Tonix Pharmaceuticals Holding are associated (or correlated) with Ardelyx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardelyx has no effect on the direction of Tonix Pharmaceuticals i.e., Tonix Pharmaceuticals and Ardelyx go up and down completely randomly.

Pair Corralation between Tonix Pharmaceuticals and Ardelyx

Given the investment horizon of 90 days Tonix Pharmaceuticals Holding is expected to generate 4.05 times more return on investment than Ardelyx. However, Tonix Pharmaceuticals is 4.05 times more volatile than Ardelyx. It trades about 0.15 of its potential returns per unit of risk. Ardelyx is currently generating about -0.08 per unit of risk. If you would invest  14.00  in Tonix Pharmaceuticals Holding on September 26, 2024 and sell it today you would earn a total of  25.00  from holding Tonix Pharmaceuticals Holding or generate 178.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Tonix Pharmaceuticals Holding  vs.  Ardelyx

Tonix Pharmaceuticals

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tonix Pharmaceuticals Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Tonix Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Ardelyx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardelyx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Tonix Pharmaceuticals and Ardelyx

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

The idea behind Tonix Pharmaceuticals Holding and Ardelyx 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.

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.