Correlation Between Amgen and Allient

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Can any of the company-specific risk be diversified away by investing in both Amgen and Allient 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 Allient into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and Allient, you can compare the effects of market volatilities on Amgen and Allient 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 Allient. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Allient.

Diversification Opportunities for Amgen and Allient

-0.83
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Amgen and Allient is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient 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 Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Amgen i.e., Amgen and Allient go up and down completely randomly.

Pair Corralation between Amgen and Allient

Given the investment horizon of 90 days Amgen Inc is expected to under-perform the Allient. But the stock apears to be less risky and, when comparing its historical volatility, Amgen Inc is 1.08 times less risky than Allient. The stock trades about -0.2 of its potential returns per unit of risk. The Allient is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  2,325  in Allient on September 13, 2024 and sell it today you would earn a total of  332.00  from holding Allient or generate 14.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Amgen Inc  vs.  Allient

 Performance 
       Timeline  
Amgen Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Allient 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Amgen and Allient Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amgen and Allient

The main advantage of trading using opposite Amgen and Allient positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Allient 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 Allient will offset losses from the drop in Allient's long position.
The idea behind Amgen Inc and Allient 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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