Correlation Between Procter Gamble and CytomX Therapeutics

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

Diversification Opportunities for Procter Gamble and CytomX Therapeutics

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Procter and CytomX is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and CytomX Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CytomX Therapeutics and Procter Gamble 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 Procter Gamble are associated (or correlated) with CytomX Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CytomX Therapeutics has no effect on the direction of Procter Gamble i.e., Procter Gamble and CytomX Therapeutics go up and down completely randomly.

Pair Corralation between Procter Gamble and CytomX Therapeutics

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.31 times more return on investment than CytomX Therapeutics. However, Procter Gamble is 3.19 times less risky than CytomX Therapeutics. It trades about 0.17 of its potential returns per unit of risk. CytomX Therapeutics is currently generating about -0.14 per unit of risk. If you would invest  16,930  in Procter Gamble on August 27, 2024 and sell it today you would earn a total of  698.00  from holding Procter Gamble or generate 4.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Procter Gamble  vs.  CytomX Therapeutics

 Performance 
       Timeline  
Procter Gamble 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Procter Gamble is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
CytomX Therapeutics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CytomX Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Procter Gamble and CytomX Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Procter Gamble and CytomX Therapeutics

The main advantage of trading using opposite Procter Gamble and CytomX Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, CytomX 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 CytomX Therapeutics will offset losses from the drop in CytomX Therapeutics' long position.
The idea behind Procter Gamble and CytomX 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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