Correlation Between Viking Therapeutics and Talphera

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

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

Diversification Opportunities for Viking Therapeutics and Talphera

0.81

Correlation Coefficient

Viking Therapeutics  Talphera

Very poor diversification

The 3 months correlation between Viking and Talphera is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Viking Therapeutics and Talphera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talphera 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 Talphera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talphera has no effect on the direction of Viking Therapeutics i.e., Viking Therapeutics and Talphera go up and down completely randomly.

Pair Corralation between Viking Therapeutics and Talphera

Given the investment horizon of 90 days Viking Therapeutics is expected to under-perform the Talphera. But the stock apears to be less risky and, when comparing its historical volatility, Viking Therapeutics is 1.38 times less risky than Talphera. The stock trades about -0.11 of its potential returns per unit of risk. The Talphera is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  91.00  in Talphera on September 22, 2024 and sell it today you would lose (27.00) from holding Talphera or give up 29.67% 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.  Talphera

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 uncertain 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.

Talphera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Talphera has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain 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 Talphera

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

The idea behind Viking Therapeutics and Talphera 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 Transaction History module to view history of all your transactions and understand their impact on performance.