Correlation Between Amgen and Crown LNG

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

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

Diversification Opportunities for Amgen and Crown LNG

-0.52

Correlation Coefficient

Amgen  Crown LNG

Excellent diversification

The 3 months correlation between Amgen and Crown is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Crown LNG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown LNG Holdings 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 Crown LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown LNG Holdings has no effect on the direction of Amgen i.e., Amgen and Crown LNG go up and down completely randomly.

Pair Corralation between Amgen and Crown LNG

Given the investment horizon of 90 days Amgen is expected to generate 2.15 times less return on investment than Crown LNG. But when comparing it to its historical volatility, Amgen Inc is 9.57 times less risky than Crown LNG. It trades about 0.25 of its potential returns per unit of risk. Crown LNG Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  28.00  in Crown LNG Holdings on December 18, 2024 and sell it today you would lose (1.00) from holding Crown LNG Holdings or give up 3.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Amgen Inc  vs.  Crown LNG Holdings

Amgen Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amgen Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Amgen displayed solid returns over the last few months and may actually be approaching a breakup point.

Crown LNG Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Crown LNG Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, Crown LNG unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amgen and Crown LNG

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

The idea behind Amgen Inc and Crown LNG Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.