Correlation Between Amgen and MicroAlgo

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

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

Diversification Opportunities for Amgen and MicroAlgo

0.28

Correlation Coefficient

Amgen  MicroAlgo

Modest diversification

The 3 months correlation between Amgen and MicroAlgo is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and MicroAlgo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroAlgo and Amgen 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 Amgen Inc are associated (or correlated) with MicroAlgo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroAlgo has no effect on the direction of Amgen i.e., Amgen and MicroAlgo go up and down completely randomly.

Pair Corralation between Amgen and MicroAlgo

Given the investment horizon of 90 days Amgen is expected to generate 25.18 times less return on investment than MicroAlgo. But when comparing it to its historical volatility, Amgen Inc is 39.06 times less risky than MicroAlgo. It trades about 0.09 of its potential returns per unit of risk. MicroAlgo is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  238.00  in MicroAlgo on July 19, 2024 and sell it today you would lose (208.00) from holding MicroAlgo or give up 87.39% of portfolio value over 90 days.

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

Amgen Inc  vs.  MicroAlgo

Amgen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amgen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Amgen is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

MicroAlgo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MicroAlgo 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in November 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Amgen and MicroAlgo

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

The idea behind Amgen Inc and MicroAlgo 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.