Correlation Between Amgen and GEN Restaurant

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

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

Diversification Opportunities for Amgen and GEN Restaurant

0.56

Correlation Coefficient

Amgen  GEN Restaurant

Very weak diversification

The 3 months correlation between Amgen and GEN is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, 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 GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Amgen i.e., Amgen and GEN Restaurant go up and down completely randomly.

Pair Corralation between Amgen and GEN Restaurant

Given the investment horizon of 90 days Amgen Inc is expected to generate 0.39 times more return on investment than GEN Restaurant. However, Amgen Inc is 2.53 times less risky than GEN Restaurant. It trades about -0.23 of its potential returns per unit of risk. GEN Restaurant Group, is currently generating about -0.11 per unit of risk. If you would invest  27,433  in Amgen Inc on October 6, 2024 and sell it today you would lose (1,311) from holding Amgen Inc or give up 4.78% of portfolio value over 90 days.

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

Amgen Inc  vs.  GEN Restaurant Group,

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.

GEN Restaurant Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEN Restaurant Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, GEN Restaurant is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Amgen and GEN Restaurant

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

The idea behind Amgen Inc and GEN Restaurant Group, 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.

Check out your portfolio center.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.