Correlation Between CSPC PHARMACEUTGR and Amgen

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

By analyzing existing cross correlation between CSPC PHARMACEUTGR ADR4 and Amgen Inc, you can compare the effects of market volatilities on CSPC PHARMACEUTGR 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 CSPC PHARMACEUTGR with a short position of Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSPC PHARMACEUTGR and Amgen.

Diversification Opportunities for CSPC PHARMACEUTGR and Amgen

0.09

Correlation Coefficient

CSPC PHARMACEUTGR  Amgen

Significant diversification

The 3 months correlation between CSPC and Amgen is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CSPC PHARMACEUTGR ADR4 and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and CSPC PHARMACEUTGR 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 CSPC PHARMACEUTGR ADR4 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 CSPC PHARMACEUTGR i.e., CSPC PHARMACEUTGR and Amgen go up and down completely randomly.

Pair Corralation between CSPC PHARMACEUTGR and Amgen

Assuming the 90 days trading horizon CSPC PHARMACEUTGR ADR4 is expected to generate 2.79 times more return on investment than Amgen. However, CSPC PHARMACEUTGR is 2.79 times more volatile than Amgen Inc. It trades about 0.06 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.09 per unit of risk. If you would invest  197.00  in CSPC PHARMACEUTGR ADR4 on September 12, 2024 and sell it today you would earn a total of  27.00  from holding CSPC PHARMACEUTGR ADR4 or generate 13.71% return on investment over 90 days.

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

CSPC PHARMACEUTGR ADR4  vs.  Amgen Inc

CSPC PHARMACEUTGR ADR4

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CSPC PHARMACEUTGR ADR4 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, CSPC PHARMACEUTGR reported solid returns over the last few months and may actually be approaching a breakup point.

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. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CSPC PHARMACEUTGR and Amgen

The main advantage of trading using opposite CSPC PHARMACEUTGR and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSPC PHARMACEUTGR 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 CSPC PHARMACEUTGR ADR4 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.