Correlation Between Amgen and Davis Commodities

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

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

Diversification Opportunities for Amgen and Davis Commodities

-0.66

Correlation Coefficient

Amgen  Davis Commodities

Excellent diversification

The 3 months correlation between Amgen and Davis is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Davis Commodities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis Commodities 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 Davis Commodities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis Commodities has no effect on the direction of Amgen i.e., Amgen and Davis Commodities go up and down completely randomly.

Pair Corralation between Amgen and Davis Commodities

Given the investment horizon of 90 days Amgen Inc is expected to generate 0.45 times more return on investment than Davis Commodities. However, Amgen Inc is 2.23 times less risky than Davis Commodities. It trades about 0.2 of its potential returns per unit of risk. Davis Commodities Limited is currently generating about -0.07 per unit of risk. If you would invest  25,722  in Amgen Inc on December 28, 2024 and sell it today you would earn a total of  4,855  from holding Amgen Inc or generate 18.87% 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.  Davis Commodities Limited

Amgen Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amgen Inc are ranked lower than 15 (%) 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.

Davis Commodities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Davis Commodities Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Amgen and Davis Commodities

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

The idea behind Amgen Inc and Davis Commodities Limited 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.