Correlation Between Viking Therapeutics and Adaptive Biotechnologies

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

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

Diversification Opportunities for Viking Therapeutics and Adaptive Biotechnologies

-0.31

Correlation Coefficient

Viking Therapeutics  Adaptive Biotechnologies

Very good diversification

The 3 months correlation between Viking and Adaptive is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Viking Therapeutics and Adaptive Biotechnologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaptive Biotechnologies 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 Adaptive Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaptive Biotechnologies has no effect on the direction of Viking Therapeutics i.e., Viking Therapeutics and Adaptive Biotechnologies go up and down completely randomly.

Pair Corralation between Viking Therapeutics and Adaptive Biotechnologies

Given the investment horizon of 90 days Viking Therapeutics is expected to generate 3.1 times more return on investment than Adaptive Biotechnologies. However, Viking Therapeutics is 3.1 times more volatile than Adaptive Biotechnologies Corp. It trades about 0.13 of its potential returns per unit of risk. Adaptive Biotechnologies Corp is currently generating about -0.01 per unit of risk. If you would invest  3,173  in Viking Therapeutics on February 11, 2024 and sell it today you would earn a total of  4,191  from holding Viking Therapeutics or generate 132.08% return on investment over 90 days.

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

Viking Therapeutics  vs.  Adaptive Biotechnologies Corp

Viking Therapeutics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Viking Therapeutics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Viking Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Adaptive Biotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adaptive Biotechnologies Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Adaptive Biotechnologies is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Viking Therapeutics and Adaptive Biotechnologies

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

The idea behind Viking Therapeutics and Adaptive Biotechnologies Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.