Correlation Between Amgen and ReTo Eco
Can any of the company-specific risk be diversified away by investing in both Amgen and ReTo Eco 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 ReTo Eco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and ReTo Eco Solutions, you can compare the effects of market volatilities on Amgen and ReTo Eco 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 ReTo Eco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and ReTo Eco.
Diversification Opportunities for Amgen and ReTo Eco
Very poor diversification
The 3 months correlation between Amgen and ReTo is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and ReTo Eco Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReTo Eco Solutions 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 ReTo Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReTo Eco Solutions has no effect on the direction of Amgen i.e., Amgen and ReTo Eco go up and down completely randomly.
Pair Corralation between Amgen and ReTo Eco
Given the investment horizon of 90 days Amgen Inc is expected to generate 0.43 times more return on investment than ReTo Eco. However, Amgen Inc is 2.34 times less risky than ReTo Eco. It trades about 0.17 of its potential returns per unit of risk. ReTo Eco Solutions is currently generating about 0.01 per unit of risk. If you would invest 26,400 in Amgen Inc on October 24, 2024 and sell it today you would earn a total of 811.00 from holding Amgen Inc or generate 3.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amgen Inc vs. ReTo Eco Solutions
Performance |
| Timeline |
| Amgen Inc |
| ReTo Eco Solutions |
Amgen and ReTo Eco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and ReTo Eco
The main advantage of trading using opposite Amgen and ReTo Eco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, ReTo Eco 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 ReTo Eco will offset losses from the drop in ReTo Eco's long position.The idea behind Amgen Inc and ReTo Eco Solutions 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.| ReTo Eco vs. Martin Marietta Materials | ReTo Eco vs. Vulcan Materials | ReTo Eco vs. Summit Materials | ReTo Eco vs. United States Lime |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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