Correlation Between Amgen and Cadeler AS

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

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

Diversification Opportunities for Amgen and Cadeler AS

0.76

Correlation Coefficient

Amgen  Cadeler AS

Poor diversification

The 3 months correlation between Amgen and Cadeler is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Cadeler AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadeler AS 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 Cadeler AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadeler AS has no effect on the direction of Amgen i.e., Amgen and Cadeler AS go up and down completely randomly.

Pair Corralation between Amgen and Cadeler AS

Given the investment horizon of 90 days Amgen is expected to generate 4.49 times less return on investment than Cadeler AS. But when comparing it to its historical volatility, Amgen Inc is 1.38 times less risky than Cadeler AS. It trades about 0.02 of its potential returns per unit of risk. Cadeler AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,820  in Cadeler AS on October 10, 2024 and sell it today you would earn a total of  454.00  from holding Cadeler AS or generate 24.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	52.53%
Values	Daily Returns

Amgen Inc  vs.  Cadeler AS

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 conflicting performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cadeler AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cadeler AS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Amgen and Cadeler AS

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

The idea behind Amgen Inc and Cadeler AS 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.