Correlation Between Ares Acquisition and Amgen

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

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

Diversification Opportunities for Ares Acquisition and Amgen

-0.9

Correlation Coefficient

Ares Acquisition  Amgen

Pay attention - limited upside

The 3 months correlation between Ares and Amgen is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ares Acquisition and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Ares Acquisition 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 Ares Acquisition are associated (or correlated) with Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of Ares Acquisition i.e., Ares Acquisition and Amgen go up and down completely randomly.

Pair Corralation between Ares Acquisition and Amgen

Given the investment horizon of 90 days Ares Acquisition is expected to generate 0.07 times more return on investment than Amgen. However, Ares Acquisition is 13.54 times less risky than Amgen. It trades about 0.16 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.21 per unit of risk. If you would invest  1,081  in Ares Acquisition on September 20, 2024 and sell it today you would earn a total of  14.00  from holding Ares Acquisition or generate 1.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Ares Acquisition  vs.  Amgen Inc

Ares Acquisition

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Acquisition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Ares Acquisition is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

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 conflicting performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ares Acquisition and Amgen

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

The idea behind Ares Acquisition and Amgen Inc 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.