Correlation Between Amgen and Evaxion Biotech

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

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

Diversification Opportunities for Amgen and Evaxion Biotech

0.94

Correlation Coefficient

Amgen  Evaxion Biotech

Almost no diversification

The 3 months correlation between Amgen and Evaxion is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Evaxion Biotech AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evaxion Biotech AS 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 Evaxion Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evaxion Biotech AS has no effect on the direction of Amgen i.e., Amgen and Evaxion Biotech go up and down completely randomly.

Pair Corralation between Amgen and Evaxion Biotech

Given the investment horizon of 90 days Amgen Inc is expected to generate 0.3 times more return on investment than Evaxion Biotech. However, Amgen Inc is 3.3 times less risky than Evaxion Biotech. It trades about -0.18 of its potential returns per unit of risk. Evaxion Biotech AS is currently generating about -0.26 per unit of risk. If you would invest  33,260  in Amgen Inc on September 14, 2024 and sell it today you would lose (6,197) from holding Amgen Inc or give up 18.63% of portfolio value over 90 days.

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

Amgen Inc  vs.  Evaxion Biotech AS

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 inconsistent 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.

Evaxion Biotech AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evaxion Biotech AS 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 basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Amgen and Evaxion Biotech

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

The idea behind Amgen Inc and Evaxion Biotech AS 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.