Correlation Between 00108WAF7 and Tonix Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both 00108WAF7 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 00108WAF7 and Tonix Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AEP TEX INC and Tonix Pharmaceuticals Holding, you can compare the effects of market volatilities on 00108WAF7 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 00108WAF7 with a short position of Tonix Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00108WAF7 and Tonix Pharmaceuticals.

Diversification Opportunities for 00108WAF7 and Tonix Pharmaceuticals

0.25

Correlation Coefficient

00108WAF7  Tonix Pharmaceuticals

Modest diversification

The 3 months correlation between 00108WAF7 and Tonix is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding AEP TEX INC and Tonix Pharmaceuticals Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tonix Pharmaceuticals and 00108WAF7 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 AEP TEX INC 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 00108WAF7 i.e., 00108WAF7 and Tonix Pharmaceuticals go up and down completely randomly.

Pair Corralation between 00108WAF7 and Tonix Pharmaceuticals

Assuming the 90 days trading horizon 00108WAF7 is expected to generate 15.08 times less return on investment than Tonix Pharmaceuticals. But when comparing it to its historical volatility, AEP TEX INC is 8.24 times less risky than Tonix Pharmaceuticals. It trades about 0.03 of its potential returns per unit of risk. Tonix Pharmaceuticals Holding is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,853  in Tonix Pharmaceuticals Holding on December 24, 2024 and sell it today you would lose (802.00) from holding Tonix Pharmaceuticals Holding or give up 20.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	77.05%
Values	Daily Returns

AEP TEX INC  vs.  Tonix Pharmaceuticals Holding

AEP TEX INC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AEP TEX INC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 00108WAF7 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Tonix Pharmaceuticals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tonix Pharmaceuticals Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Tonix Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 00108WAF7 and Tonix Pharmaceuticals

The main advantage of trading using opposite 00108WAF7 and Tonix Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00108WAF7 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 AEP TEX INC 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.