Correlation Between Viking Therapeutics and VistaGen Therapeutics

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

Diversification Opportunities for Viking Therapeutics and VistaGen Therapeutics

0.9

Correlation Coefficient

Viking Therapeutics  VistaGen Therapeutics

Almost no diversification

The 3 months correlation between Viking and VistaGen is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Viking Therapeutics and VistaGen Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VistaGen 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 VistaGen Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VistaGen Therapeutics has no effect on the direction of Viking Therapeutics i.e., Viking Therapeutics and VistaGen Therapeutics go up and down completely randomly.

Pair Corralation between Viking Therapeutics and VistaGen Therapeutics

Given the investment horizon of 90 days Viking Therapeutics is expected to under-perform the VistaGen Therapeutics. In addition to that, Viking Therapeutics is 2.26 times more volatile than VistaGen Therapeutics. It trades about -0.14 of its total potential returns per unit of risk. VistaGen Therapeutics is currently generating about -0.24 per unit of volatility. If you would invest  300.00  in VistaGen Therapeutics on September 21, 2024 and sell it today you would lose (75.00) from holding VistaGen Therapeutics or give up 25.0% of portfolio value over 90 days.

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

Viking Therapeutics  vs.  VistaGen 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 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.

VistaGen Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VistaGen Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Viking Therapeutics and VistaGen Therapeutics

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

The idea behind Viking Therapeutics and VistaGen 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.