Correlation Between Viking Therapeutics and Day One

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

By analyzing existing cross correlation between Viking Therapeutics and Day One Biopharmaceuticals, you can compare the effects of market volatilities on Viking Therapeutics and Day One 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 Day One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viking Therapeutics and Day One.

Diversification Opportunities for Viking Therapeutics and Day One

0.46

Correlation Coefficient

Viking Therapeutics  Day One

Very weak diversification

The 3 months correlation between Viking and Day is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Viking Therapeutics and Day One Biopharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Day One Biopharmaceu 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 Day One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Day One Biopharmaceu has no effect on the direction of Viking Therapeutics i.e., Viking Therapeutics and Day One go up and down completely randomly.

Pair Corralation between Viking Therapeutics and Day One

Given the investment horizon of 90 days Viking Therapeutics is expected to generate 2.34 times less return on investment than Day One. In addition to that, Viking Therapeutics is 1.95 times more volatile than Day One Biopharmaceuticals. It trades about 0.01 of its total potential returns per unit of risk. Day One Biopharmaceuticals is currently generating about 0.03 per unit of volatility. If you would invest  1,306  in Day One Biopharmaceuticals on September 3, 2024 and sell it today you would earn a total of  78.00  from holding Day One Biopharmaceuticals or generate 5.97% return on investment over 90 days.

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

Viking Therapeutics  vs.  Day One Biopharmaceuticals

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 fairly strong basic indicators, Viking Therapeutics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Day One Biopharmaceu

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Day One Biopharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Day One is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Viking Therapeutics and Day One

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

The idea behind Viking Therapeutics and Day One Biopharmaceuticals 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.