Correlation Between HP and AMGEN

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

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

Diversification Opportunities for HP and AMGEN

-0.37

Correlation Coefficient

HP  AMGEN

Very good diversification

The 3 months correlation between HP and AMGEN is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and AMGEN INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMGEN INC and HP 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 HP Inc 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 HP i.e., HP and AMGEN go up and down completely randomly.

Pair Corralation between HP and AMGEN

Considering the 90-day investment horizon HP Inc is expected to generate 2.33 times more return on investment than AMGEN. However, HP is 2.33 times more volatile than AMGEN INC. It trades about 0.04 of its potential returns per unit of risk. AMGEN INC is currently generating about -0.22 per unit of risk. If you would invest  3,332  in HP Inc on September 13, 2024 and sell it today you would earn a total of  123.00  from holding HP Inc or generate 3.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	69.84%
Values	Daily Returns

HP Inc  vs.  AMGEN INC

HP Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HP Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, HP is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail 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. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat 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 AMGEN INC investors.

Pair Trading with HP and AMGEN

The main advantage of trading using opposite HP and AMGEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP 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 HP Inc 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.