Correlation Between Ligand Pharmaceuticals and Oric Pharmaceuticals

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

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

Diversification Opportunities for Ligand Pharmaceuticals and Oric Pharmaceuticals

-0.14

Correlation Coefficient

Ligand Pharmaceuticals  Oric Pharmaceuticals

Good diversification

The 3 months correlation between Ligand and Oric is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ligand Pharmaceuticals Incorpo and Oric Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oric Pharmaceuticals 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 Incorporated are associated (or correlated) with Oric Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oric Pharmaceuticals has no effect on the direction of Ligand Pharmaceuticals i.e., Ligand Pharmaceuticals and Oric Pharmaceuticals go up and down completely randomly.

Pair Corralation between Ligand Pharmaceuticals and Oric Pharmaceuticals

Given the investment horizon of 90 days Ligand Pharmaceuticals is expected to generate 2.1 times less return on investment than Oric Pharmaceuticals. But when comparing it to its historical volatility, Ligand Pharmaceuticals Incorporated is 2.14 times less risky than Oric Pharmaceuticals. It trades about 0.07 of its potential returns per unit of risk. Oric Pharmaceuticals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  347.00  in Oric Pharmaceuticals on September 3, 2024 and sell it today you would earn a total of  643.00  from holding Oric Pharmaceuticals or generate 185.3% return on investment over 90 days.

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

Ligand Pharmaceuticals Incorpo  vs.  Oric Pharmaceuticals

Ligand Pharmaceuticals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ligand Pharmaceuticals Incorporated are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Ligand Pharmaceuticals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Oric Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oric Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Oric Pharmaceuticals is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ligand Pharmaceuticals and Oric Pharmaceuticals

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

The idea behind Ligand Pharmaceuticals Incorporated and Oric Pharmaceuticals 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 CEOs Directory module to screen CEOs from public companies around the world.