Correlation Between Amgen and Luye Pharma
Can any of the company-specific risk be diversified away by investing in both Amgen and Luye Pharma 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 Luye Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and Luye Pharma Group, you can compare the effects of market volatilities on Amgen and Luye Pharma 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 Luye Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Luye Pharma.
Diversification Opportunities for Amgen and Luye Pharma
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amgen and Luye is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Luye Pharma Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luye Pharma Group 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 Luye Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luye Pharma Group has no effect on the direction of Amgen i.e., Amgen and Luye Pharma go up and down completely randomly.
Pair Corralation between Amgen and Luye Pharma
If you would invest 26,421 in Amgen Inc on November 9, 2024 and sell it today you would earn a total of 3,357 from holding Amgen Inc or generate 12.71% 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. Luye Pharma Group
Performance |
| Timeline |
| Amgen Inc |
| Luye Pharma Group |
Amgen and Luye Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and Luye Pharma
The main advantage of trading using opposite Amgen and Luye Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Luye Pharma 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 Luye Pharma will offset losses from the drop in Luye Pharma's long position.The idea behind Amgen Inc and Luye Pharma Group 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.| Luye Pharma vs. Astellas Pharma | Luye Pharma vs. Sanofi ADR | Luye Pharma vs. Amarin PLC | Luye Pharma vs. Novartis AG ADR |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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