Correlation Between Amgen and Chimerix
Can any of the company-specific risk be diversified away by investing in both Amgen and Chimerix 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 Chimerix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and Chimerix, you can compare the effects of market volatilities on Amgen and Chimerix 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 Chimerix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Chimerix.
Diversification Opportunities for Amgen and Chimerix
Excellent diversification
The 3 months correlation between Amgen and Chimerix is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Chimerix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chimerix 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 Chimerix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chimerix has no effect on the direction of Amgen i.e., Amgen and Chimerix go up and down completely randomly.
Pair Corralation between Amgen and Chimerix
Given the investment horizon of 90 days Amgen is expected to generate 2.14 times less return on investment than Chimerix. But when comparing it to its historical volatility, Amgen Inc is 3.13 times less risky than Chimerix. It trades about 0.35 of its potential returns per unit of risk. Chimerix is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 348.00 in Chimerix on November 1, 2024 and sell it today you would earn a total of 62.00 from holding Chimerix or generate 17.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amgen Inc vs. Chimerix
Performance |
| Timeline |
| Amgen Inc |
| Chimerix |
Amgen and Chimerix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and Chimerix
The main advantage of trading using opposite Amgen and Chimerix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Chimerix 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 Chimerix will offset losses from the drop in Chimerix's long position.The idea behind Amgen Inc and Chimerix 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.| Chimerix vs. Assembly Biosciences | Chimerix vs. Spero Therapeutics | Chimerix vs. Achilles Therapeutics PLC | Chimerix vs. Instil Bio |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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