Correlation Between CarsalesCom and Amgen

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

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

Diversification Opportunities for CarsalesCom and Amgen

-0.71

Correlation Coefficient

CarsalesCom  Amgen

Pay attention - limited upside

The 3 months correlation between CarsalesCom and Amgen is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and CarsalesCom 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 CarsalesCom 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 CarsalesCom i.e., CarsalesCom and Amgen go up and down completely randomly.

Pair Corralation between CarsalesCom and Amgen

Assuming the 90 days horizon CarsalesCom is expected to under-perform the Amgen. But the stock apears to be less risky and, when comparing its historical volatility, CarsalesCom is 2.05 times less risky than Amgen. The stock trades about -0.21 of its potential returns per unit of risk. The Amgen Inc is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  26,415  in Amgen Inc on September 18, 2024 and sell it today you would lose (935.00) from holding Amgen Inc or give up 3.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

CarsalesCom  vs.  Amgen Inc

CarsalesCom

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CarsalesCom are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CarsalesCom is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CarsalesCom and Amgen

The main advantage of trading using opposite CarsalesCom and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarsalesCom 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 CarsalesCom 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.