Correlation Between Calithera Biosciences and Tonix Pharmaceuticals

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

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

Diversification Opportunities for Calithera Biosciences and Tonix Pharmaceuticals

-0.46

Correlation Coefficient

Calithera Biosciences  Tonix Pharmaceuticals

Very good diversification

The 3 months correlation between Calithera and Tonix is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Calithera Biosciences and Tonix Pharmaceuticals Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tonix Pharmaceuticals and Calithera Biosciences 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 Calithera Biosciences 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 Calithera Biosciences i.e., Calithera Biosciences and Tonix Pharmaceuticals go up and down completely randomly.

Pair Corralation between Calithera Biosciences and Tonix Pharmaceuticals

Given the investment horizon of 90 days Calithera Biosciences is expected to under-perform the Tonix Pharmaceuticals. In addition to that, Calithera Biosciences is 1.81 times more volatile than Tonix Pharmaceuticals Holding. It trades about -0.15 of its total potential returns per unit of risk. Tonix Pharmaceuticals Holding is currently generating about -0.16 per unit of volatility. If you would invest  5,664  in Tonix Pharmaceuticals Holding on August 15, 2024 and sell it today you would lose (5,650) from holding Tonix Pharmaceuticals Holding or give up 99.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	11.26%
Values	Daily Returns

Calithera Biosciences  vs.  Tonix Pharmaceuticals Holding

Calithera Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calithera Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Calithera Biosciences 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

0 of 100

Very Weak

Over the last 90 days Tonix Pharmaceuticals Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Calithera Biosciences and Tonix Pharmaceuticals

The main advantage of trading using opposite Calithera Biosciences and Tonix Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calithera Biosciences 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 Calithera Biosciences 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.