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

0.81

Correlation Coefficient

Viking Therapeutics  BioXcel Therapeutics

Very poor diversification

The 3 months correlation between Viking and BioXcel is 0.81. 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 1.37 times less risky than BioXcel Therapeutics. The stock trades about -0.2 of its potential returns per unit of risk. The BioXcel Therapeutics is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  46.00  in BioXcel Therapeutics on September 27, 2024 and sell it today you would lose (9.33) from holding BioXcel Therapeutics or give up 20.28% 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

Viking Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viking Therapeutics 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 basic 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.

BioXcel Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioXcel Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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.

The idea behind Viking Therapeutics and BioXcel Therapeutics 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.