Correlation Between Amgen and Chemtrade Logistics

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

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

Diversification Opportunities for Amgen and Chemtrade Logistics

-0.43

Correlation Coefficient

Amgen  Chemtrade Logistics

Very good diversification

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

Pair Corralation between Amgen and Chemtrade Logistics

Given the investment horizon of 90 days Amgen Inc is expected to under-perform the Chemtrade Logistics. In addition to that, Amgen is 1.11 times more volatile than Chemtrade Logistics Income. It trades about -0.21 of its total potential returns per unit of risk. Chemtrade Logistics Income is currently generating about 0.0 per unit of volatility. If you would invest  766.00  in Chemtrade Logistics Income on September 20, 2024 and sell it today you would lose (8.00) from holding Chemtrade Logistics Income or give up 1.04% of portfolio value over 90 days.

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

Amgen Inc  vs.  Chemtrade Logistics Income

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.

Chemtrade Logistics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemtrade Logistics Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Chemtrade Logistics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Amgen and Chemtrade Logistics

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

The idea behind Amgen Inc and Chemtrade Logistics Income 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.