Correlation Between TG Therapeutics and Viking Therapeutics

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

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

Diversification Opportunities for TG Therapeutics and Viking Therapeutics

0.05

Correlation Coefficient

TG Therapeutics  Viking Therapeutics

Significant diversification

The 3 months correlation between TGTX and Viking is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding TG Therapeutics and Viking Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viking Therapeutics and TG 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 TG Therapeutics 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 TG Therapeutics i.e., TG Therapeutics and Viking Therapeutics go up and down completely randomly.

Pair Corralation between TG Therapeutics and Viking Therapeutics

Given the investment horizon of 90 days TG Therapeutics is expected to under-perform the Viking Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, TG Therapeutics is 1.62 times less risky than Viking Therapeutics. The stock trades about 0.0 of its potential returns per unit of risk. The Viking Therapeutics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,108  in Viking Therapeutics on March 12, 2024 and sell it today you would earn a total of  3,491  from holding Viking Therapeutics or generate 165.61% return on investment over 90 days.

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

TG Therapeutics  vs.  Viking Therapeutics

TG Therapeutics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TG Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, TG Therapeutics is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Viking Therapeutics

Risk-Adjusted Performance

0 of 100

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 latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with TG Therapeutics and Viking Therapeutics

The main advantage of trading using opposite TG Therapeutics and Viking Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TG Therapeutics 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 TG Therapeutics 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.