Correlation Between Ligand Pharmaceuticals and Procter Gamble

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Can any of the company-specific risk be diversified away by investing in both Ligand Pharmaceuticals and Procter Gamble 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 Pharmaceuticals and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ligand Pharmaceuticals Tr and Procter Gamble, you can compare the effects of market volatilities on Ligand Pharmaceuticals and Procter Gamble 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 Pharmaceuticals with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ligand Pharmaceuticals and Procter Gamble.

Diversification Opportunities for Ligand Pharmaceuticals and Procter Gamble

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Ligand and Procter is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ligand Pharmaceuticals Tr and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Ligand 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 Ligand Pharmaceuticals Tr are associated (or correlated) with Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of Ligand Pharmaceuticals i.e., Ligand Pharmaceuticals and Procter Gamble go up and down completely randomly.

Pair Corralation between Ligand Pharmaceuticals and Procter Gamble

Assuming the 90 days horizon Ligand Pharmaceuticals Tr is expected to generate 19.98 times more return on investment than Procter Gamble. However, Ligand Pharmaceuticals is 19.98 times more volatile than Procter Gamble. It trades about 0.09 of its potential returns per unit of risk. Procter Gamble is currently generating about 0.02 per unit of risk. If you would invest  11.00  in Ligand Pharmaceuticals Tr on December 30, 2023 and sell it today you would earn a total of  1.00  from holding Ligand Pharmaceuticals Tr or generate 9.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy22.27%
ValuesDaily Returns

Ligand Pharmaceuticals Tr  vs.  Procter Gamble

 Performance 
       Timeline  
Ligand Pharmaceuticals 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Ligand Pharmaceuticals Tr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Procter Gamble 

Risk-Adjusted Performance

15 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, Procter Gamble may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Ligand Pharmaceuticals and Procter Gamble Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ligand Pharmaceuticals and Procter Gamble

The main advantage of trading using opposite Ligand Pharmaceuticals and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ligand Pharmaceuticals position performs unexpectedly, Procter Gamble 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 Procter Gamble will offset losses from the drop in Procter Gamble's long position.
The idea behind Ligand Pharmaceuticals Tr and Procter Gamble 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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