Correlation Between Amgen and CSPC Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Amgen and CSPC Pharmaceutical 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 CSPC Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and CSPC Pharmaceutical Group, you can compare the effects of market volatilities on Amgen and CSPC Pharmaceutical 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 CSPC Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and CSPC Pharmaceutical.
Diversification Opportunities for Amgen and CSPC Pharmaceutical
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amgen and CSPC is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and CSPC Pharmaceutical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSPC Pharmaceutical 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 CSPC Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSPC Pharmaceutical has no effect on the direction of Amgen i.e., Amgen and CSPC Pharmaceutical go up and down completely randomly.
Pair Corralation between Amgen and CSPC Pharmaceutical
Given the investment horizon of 90 days Amgen Inc is expected to under-perform the CSPC Pharmaceutical. But the stock apears to be less risky and, when comparing its historical volatility, Amgen Inc is 5.29 times less risky than CSPC Pharmaceutical. The stock trades about -0.17 of its potential returns per unit of risk. The CSPC Pharmaceutical Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 62.00 in CSPC Pharmaceutical Group on August 30, 2024 and sell it today you would earn a total of 5.00 from holding CSPC Pharmaceutical Group or generate 8.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amgen Inc vs. CSPC Pharmaceutical Group
Performance |
| Timeline |
| Amgen Inc |
| CSPC Pharmaceutical |
Amgen and CSPC Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and CSPC Pharmaceutical
The main advantage of trading using opposite Amgen and CSPC Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, CSPC Pharmaceutical 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 CSPC Pharmaceutical will offset losses from the drop in CSPC Pharmaceutical's long position.| Amgen vs. Pharvaris BV | Amgen vs. Brinker International | Amgen vs. Alcoa Corp | Amgen vs. Direxion Daily FTSE |
| CSPC Pharmaceutical vs. Ono Pharmaceutical Co | CSPC Pharmaceutical vs. Grifols SA ADR | CSPC Pharmaceutical vs. Pfizer Inc | CSPC Pharmaceutical vs. Northann Corp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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