Correlation Between Viking Therapeutics and Amgen

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

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

Diversification Opportunities for Viking Therapeutics and Amgen

-0.61

Correlation Coefficient

Viking Therapeutics  Amgen

Excellent diversification

The 3 months correlation between Viking and Amgen is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Viking Therapeutics and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc 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 Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of Viking Therapeutics i.e., Viking Therapeutics and Amgen go up and down completely randomly.

Pair Corralation between Viking Therapeutics and Amgen

Given the investment horizon of 90 days Viking Therapeutics is expected to generate 3.08 times less return on investment than Amgen. In addition to that, Viking Therapeutics is 1.13 times more volatile than Amgen Inc. It trades about 0.06 of its total potential returns per unit of risk. Amgen Inc is currently generating about 0.21 per unit of volatility. If you would invest  26,920  in Amgen Inc on February 7, 2024 and sell it today you would earn a total of  3,325  from holding Amgen Inc or generate 12.35% return on investment over 90 days.

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

Viking Therapeutics  vs.  Amgen Inc

Viking Therapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Viking Therapeutics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Viking Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Amgen Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amgen Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Amgen is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Viking Therapeutics and Amgen

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

The idea behind Viking Therapeutics and Amgen Inc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.