Correlation Between Tonix Pharmaceuticals and Eton Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Tonix Pharmaceuticals and Eton Pharmaceuticals 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 Eton Pharmaceuticals 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 Eton Pharmaceuticals, you can compare the effects of market volatilities on Tonix Pharmaceuticals and Eton Pharmaceuticals 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 Eton Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tonix Pharmaceuticals and Eton Pharmaceuticals.

Diversification Opportunities for Tonix Pharmaceuticals and Eton Pharmaceuticals

0.57

Correlation Coefficient

Tonix Pharmaceuticals  Eton Pharmaceuticals

Very weak diversification

The 3 months correlation between Tonix and Eton is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Tonix Pharmaceuticals Holding and Eton Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eton Pharmaceuticals 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 Eton Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eton Pharmaceuticals has no effect on the direction of Tonix Pharmaceuticals i.e., Tonix Pharmaceuticals and Eton Pharmaceuticals go up and down completely randomly.

Pair Corralation between Tonix Pharmaceuticals and Eton Pharmaceuticals

Given the investment horizon of 90 days Tonix Pharmaceuticals is expected to generate 2.8 times less return on investment than Eton Pharmaceuticals. In addition to that, Tonix Pharmaceuticals is 1.46 times more volatile than Eton Pharmaceuticals. It trades about 0.09 of its total potential returns per unit of risk. Eton Pharmaceuticals is currently generating about 0.35 per unit of volatility. If you would invest  482.00  in Eton Pharmaceuticals on September 12, 2024 and sell it today you would earn a total of  722.00  from holding Eton Pharmaceuticals or generate 149.79% return on investment over 90 days.

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

Tonix Pharmaceuticals Holding  vs.  Eton Pharmaceuticals

Tonix Pharmaceuticals

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tonix Pharmaceuticals Holding are ranked lower than 6 (%) 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.

Eton Pharmaceuticals

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Eton Pharmaceuticals are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Eton Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tonix Pharmaceuticals and Eton Pharmaceuticals

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

The idea behind Tonix Pharmaceuticals Holding and Eton Pharmaceuticals 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.