Can any of the company-specific risk be diversified away by investing in both Pasithea Therapeutics and Viking 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 Pasithea Therapeutics and Viking Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pasithea Therapeutics Corp and Viking Therapeutics, you can compare the effects of market volatilities on Pasithea Therapeutics and Viking 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 Pasithea Therapeutics with a short position of Viking Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pasithea Therapeutics and Viking Therapeutics.
Diversification Opportunities for Pasithea Therapeutics and Viking Therapeutics
The 3 months correlation between Pasithea and Viking is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Pasithea Therapeutics Corp and Viking Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viking Therapeutics and Pasithea 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 Pasithea Therapeutics Corp are associated (or correlated) with Viking Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viking Therapeutics has no effect on the direction of Pasithea Therapeutics i.e., Pasithea Therapeutics and Viking Therapeutics go up and down completely randomly.
Pair Corralation between Pasithea Therapeutics and Viking Therapeutics
Given the investment horizon of 90 days Pasithea Therapeutics Corp is expected to under-perform the Viking Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Pasithea Therapeutics Corp is 1.53 times less risky than Viking Therapeutics. The stock trades about -0.02 of its potential returns per unit of risk. The Viking Therapeutics is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 217.00 in Viking Therapeutics on March 6, 2024 and sell it today you would earn a total of 6,010 from holding Viking Therapeutics or generate 2769.59% return on investment over 90 days.
Over the last 90 days Pasithea Therapeutics Corp 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 somewhat strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Over the last 90 days Viking Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.