Correlation Between ABVC Biopharma and Tonix Pharmaceuticals

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

By analyzing existing cross correlation between ABVC Biopharma and Tonix Pharmaceuticals Holding, you can compare the effects of market volatilities on ABVC Biopharma and Tonix Pharmaceuticals 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 ABVC Biopharma with a short position of Tonix Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABVC Biopharma and Tonix Pharmaceuticals.

Diversification Opportunities for ABVC Biopharma and Tonix Pharmaceuticals

-0.31

Correlation Coefficient

ABVC Biopharma  Tonix Pharmaceuticals

Very good diversification

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

Pair Corralation between ABVC Biopharma and Tonix Pharmaceuticals

Given the investment horizon of 90 days ABVC Biopharma is expected to generate 0.41 times more return on investment than Tonix Pharmaceuticals. However, ABVC Biopharma is 2.43 times less risky than Tonix Pharmaceuticals. It trades about 0.1 of its potential returns per unit of risk. Tonix Pharmaceuticals Holding is currently generating about -0.04 per unit of risk. If you would invest  52.00  in ABVC Biopharma on December 19, 2024 and sell it today you would earn a total of  14.00  from holding ABVC Biopharma or generate 26.92% return on investment over 90 days.

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

ABVC Biopharma  vs.  Tonix Pharmaceuticals Holding

ABVC Biopharma

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ABVC Biopharma are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, ABVC Biopharma exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tonix Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tonix Pharmaceuticals Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with ABVC Biopharma and Tonix Pharmaceuticals

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

The idea behind ABVC Biopharma and Tonix Pharmaceuticals Holding 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.