Correlation Between Ligand Pharms and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both Ligand Pharms and Ecopetrol 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 Ligand Pharms and Ecopetrol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ligand Pharms Glucagon and Ecopetrol SA ADR, you can compare the effects of market volatilities on Ligand Pharms and Ecopetrol 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 Ligand Pharms with a short position of Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ligand Pharms and Ecopetrol.
Diversification Opportunities for Ligand Pharms and Ecopetrol
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ligand and Ecopetrol is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ligand Pharms Glucagon and Ecopetrol SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopetrol SA ADR and Ligand Pharms 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 Ligand Pharms Glucagon are associated (or correlated) with Ecopetrol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecopetrol SA ADR has no effect on the direction of Ligand Pharms i.e., Ligand Pharms and Ecopetrol go up and down completely randomly.
Pair Corralation between Ligand Pharms and Ecopetrol
Assuming the 90 days horizon Ligand Pharms Glucagon is expected to generate 20.45 times more return on investment than Ecopetrol. However, Ligand Pharms is 20.45 times more volatile than Ecopetrol SA ADR. It trades about 0.71 of its potential returns per unit of risk. Ecopetrol SA ADR is currently generating about 0.31 per unit of risk. If you would invest 0.19 in Ligand Pharms Glucagon on January 26, 2024 and sell it today you would earn a total of 0.11 from holding Ligand Pharms Glucagon or generate 57.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 9.52% |
| Values | Daily Returns |
Ligand Pharms Glucagon vs. Ecopetrol SA ADR
Performance |
| Timeline |
| Ligand Pharms Glucagon |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Ecopetrol SA ADR |
Ligand Pharms and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ligand Pharms and Ecopetrol
The main advantage of trading using opposite Ligand Pharms and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ligand Pharms position performs unexpectedly, Ecopetrol 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 Ecopetrol will offset losses from the drop in Ecopetrol's long position.| Ligand Pharms vs. Niagara Mohawk Power | Ligand Pharms vs. The Siam Cement | Ligand Pharms vs. Oaktree Capital Group |
| Ecopetrol vs. Petroleo Brasileiro Petrobras | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Eni SpA ADR | Ecopetrol vs. Cenovus Energy |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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