Correlation Between Amgen and Meiko Electronics

Can any of the company-specific risk be diversified away by investing in both Amgen and Meiko Electronics 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 Meiko Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amgen Inc and Meiko Electronics Co, you can compare the effects of market volatilities on Amgen and Meiko Electronics 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 Meiko Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Meiko Electronics.

Diversification Opportunities for Amgen and Meiko Electronics

-0.62

Correlation Coefficient

Amgen  Meiko Electronics

Excellent diversification

The 3 months correlation between Amgen and Meiko is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Meiko Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiko Electronics 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 Meiko Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiko Electronics has no effect on the direction of Amgen i.e., Amgen and Meiko Electronics go up and down completely randomly.

Pair Corralation between Amgen and Meiko Electronics

Assuming the 90 days trading horizon Amgen Inc is expected to generate 0.5 times more return on investment than Meiko Electronics. However, Amgen Inc is 1.99 times less risky than Meiko Electronics. It trades about 0.16 of its potential returns per unit of risk. Meiko Electronics Co is currently generating about -0.12 per unit of risk. If you would invest  25,439  in Amgen Inc on December 20, 2024 and sell it today you would earn a total of  3,451  from holding Amgen Inc or generate 13.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Amgen Inc  vs.  Meiko Electronics Co

Amgen Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amgen Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Amgen displayed solid returns over the last few months and may actually be approaching a breakup point.

Meiko Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Meiko Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Amgen and Meiko Electronics

The main advantage of trading using opposite Amgen and Meiko Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Meiko Electronics 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 Meiko Electronics will offset losses from the drop in Meiko Electronics' long position.

The idea behind Amgen Inc and Meiko Electronics Co 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.