Correlation Between Terns Pharmaceuticals and Viking Therapeutics

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

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

Diversification Opportunities for Terns Pharmaceuticals and Viking Therapeutics

0.86

Correlation Coefficient

Terns Pharmaceuticals  Viking Therapeutics

Very poor diversification

The 3 months correlation between Terns and Viking is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Terns Pharmaceuticals and Viking Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viking Therapeutics and Terns Pharmaceuticals 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 Terns Pharmaceuticals 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 Terns Pharmaceuticals i.e., Terns Pharmaceuticals and Viking Therapeutics go up and down completely randomly.

Pair Corralation between Terns Pharmaceuticals and Viking Therapeutics

Given the investment horizon of 90 days Terns Pharmaceuticals is expected to generate 1.27 times more return on investment than Viking Therapeutics. However, Terns Pharmaceuticals is 1.27 times more volatile than Viking Therapeutics. It trades about 0.25 of its potential returns per unit of risk. Viking Therapeutics is currently generating about 0.13 per unit of risk. If you would invest  301.00  in Terns Pharmaceuticals on May 6, 2025 and sell it today you would earn a total of  246.00  from holding Terns Pharmaceuticals or generate 81.73% return on investment over 90 days.

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

Terns Pharmaceuticals  vs.  Viking Therapeutics

Terns Pharmaceuticals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Terns Pharmaceuticals are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Terns Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

Viking Therapeutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Viking Therapeutics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Viking Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Terns Pharmaceuticals and Viking Therapeutics

The main advantage of trading using opposite Terns Pharmaceuticals and Viking Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terns Pharmaceuticals 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 Terns Pharmaceuticals 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.