Correlation Between Amgen and Context Therapeutics

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

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

Diversification Opportunities for Amgen and Context Therapeutics

0.79

Correlation Coefficient

Amgen  Context Therapeutics

Poor diversification

The 3 months correlation between Amgen and Context is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Context Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Context Therapeutics 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 Context Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Context Therapeutics has no effect on the direction of Amgen i.e., Amgen and Context Therapeutics go up and down completely randomly.

Pair Corralation between Amgen and Context Therapeutics

Given the investment horizon of 90 days Amgen Inc is expected to generate 0.46 times more return on investment than Context Therapeutics. However, Amgen Inc is 2.17 times less risky than Context Therapeutics. It trades about -0.13 of its potential returns per unit of risk. Context Therapeutics is currently generating about -0.3 per unit of risk. If you would invest  27,876  in Amgen Inc on September 17, 2024 and sell it today you would lose (1,235) from holding Amgen Inc or give up 4.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Amgen Inc  vs.  Context Therapeutics

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

Context Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Context Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Amgen and Context Therapeutics

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

The idea behind Amgen Inc and Context Therapeutics 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.