Correlation Between PDS Biotechnology and Viking Therapeutics

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

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

Diversification Opportunities for PDS Biotechnology and Viking Therapeutics

0.93

Correlation Coefficient

PDS Biotechnology  Viking Therapeutics

Almost no diversification

The 3 months correlation between PDS and Viking is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding PDS Biotechnology Corp and Viking Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viking Therapeutics and PDS Biotechnology 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 PDS Biotechnology 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 PDS Biotechnology i.e., PDS Biotechnology and Viking Therapeutics go up and down completely randomly.

Pair Corralation between PDS Biotechnology and Viking Therapeutics

Given the investment horizon of 90 days PDS Biotechnology Corp is expected to generate 1.31 times more return on investment than Viking Therapeutics. However, PDS Biotechnology is 1.31 times more volatile than Viking Therapeutics. It trades about -0.07 of its potential returns per unit of risk. Viking Therapeutics is currently generating about -0.2 per unit of risk. If you would invest  219.00  in PDS Biotechnology Corp on November 29, 2024 and sell it today you would lose (65.00) from holding PDS Biotechnology Corp or give up 29.68% of portfolio value over 90 days.

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

PDS Biotechnology Corp  vs.  Viking Therapeutics

PDS Biotechnology Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days PDS Biotechnology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Viking Therapeutics

Risk-Adjusted Performance

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 March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with PDS Biotechnology and Viking Therapeutics

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

The idea behind PDS Biotechnology Corp and Viking 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.