Correlation Between Viking Therapeutics and Alnylam Pharmaceuticals

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

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

Diversification Opportunities for Viking Therapeutics and Alnylam Pharmaceuticals

-0.33

Correlation Coefficient

Viking Therapeutics  Alnylam Pharmaceuticals

Very good diversification

The 3 months correlation between Viking and Alnylam is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Viking Therapeutics and Alnylam Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alnylam Pharmaceuticals 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 Alnylam Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alnylam Pharmaceuticals has no effect on the direction of Viking Therapeutics i.e., Viking Therapeutics and Alnylam Pharmaceuticals go up and down completely randomly.

Pair Corralation between Viking Therapeutics and Alnylam Pharmaceuticals

Given the investment horizon of 90 days Viking Therapeutics is expected to under-perform the Alnylam Pharmaceuticals. In addition to that, Viking Therapeutics is 1.59 times more volatile than Alnylam Pharmaceuticals. It trades about -0.12 of its total potential returns per unit of risk. Alnylam Pharmaceuticals is currently generating about 0.09 per unit of volatility. If you would invest  23,601  in Alnylam Pharmaceuticals on December 29, 2024 and sell it today you would earn a total of  3,501  from holding Alnylam Pharmaceuticals or generate 14.83% 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.  Alnylam Pharmaceuticals

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

Alnylam Pharmaceuticals

Risk-Adjusted Performance

OK

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

Pair Trading with Viking Therapeutics and Alnylam Pharmaceuticals

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

The idea behind Viking Therapeutics and Alnylam Pharmaceuticals 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.