Correlation Between HP and AMGEN

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Can any of the company-specific risk be diversified away by investing in both HP and AMGEN 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 HP and AMGEN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and AMGEN INC 44, you can compare the effects of market volatilities on HP and AMGEN 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 HP with a short position of AMGEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and AMGEN.

Diversification Opportunities for HP and AMGEN

-0.59
  Correlation Coefficient
 HP

Excellent diversification

The 3 months correlation between HP and AMGEN is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and AMGEN INC 44 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMGEN INC 44 and HP 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 HP Inc are associated (or correlated) with AMGEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMGEN INC 44 has no effect on the direction of HP i.e., HP and AMGEN go up and down completely randomly.

Pair Corralation between HP and AMGEN

Considering the 90-day investment horizon HP is expected to generate 22.39 times less return on investment than AMGEN. But when comparing it to its historical volatility, HP Inc is 25.99 times less risky than AMGEN. It trades about 0.05 of its potential returns per unit of risk. AMGEN INC 44 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,813  in AMGEN INC 44 on August 26, 2024 and sell it today you would earn a total of  0.00  from holding AMGEN INC 44 or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy97.99%
ValuesDaily Returns

HP Inc  vs.  AMGEN INC 44

 Performance 
       Timeline  
HP Inc 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in HP Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, HP may actually be approaching a critical reversion point that can send shares even higher in December 2024.
AMGEN INC 44 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AMGEN INC 44 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AMGEN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

HP and AMGEN Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HP and AMGEN

The main advantage of trading using opposite HP and AMGEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, AMGEN 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 AMGEN will offset losses from the drop in AMGEN's long position.
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The idea behind HP Inc and AMGEN INC 44 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.
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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