Correlation Between Amgen and Akebia Ther

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

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

Diversification Opportunities for Amgen and Akebia Ther

-0.65

Correlation Coefficient

Amgen  Akebia Ther

Excellent diversification

The 3 months correlation between Amgen and Akebia is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Akebia Ther in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akebia Ther 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 Akebia Ther. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akebia Ther has no effect on the direction of Amgen i.e., Amgen and Akebia Ther go up and down completely randomly.

Pair Corralation between Amgen and Akebia Ther

Given the investment horizon of 90 days Amgen is expected to generate 2.94 times less return on investment than Akebia Ther. But when comparing it to its historical volatility, Amgen Inc is 3.37 times less risky than Akebia Ther. It trades about 0.06 of its potential returns per unit of risk. Akebia Ther is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  125.00  in Akebia Ther on August 31, 2024 and sell it today you would earn a total of  81.00  from holding Akebia Ther or generate 64.8% 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.  Akebia Ther

Amgen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amgen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Akebia Ther

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Akebia Ther are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Akebia Ther sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amgen and Akebia Ther

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

The idea behind Amgen Inc and Akebia Ther 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.