Correlation Between Amgen and Zapata Computing

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

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

Diversification Opportunities for Amgen and Zapata Computing

0.81

Correlation Coefficient

Amgen  Zapata Computing

Very poor diversification

The 3 months correlation between Amgen and Zapata is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Zapata Computing Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zapata Computing 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 Zapata Computing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zapata Computing Holdings has no effect on the direction of Amgen i.e., Amgen and Zapata Computing go up and down completely randomly.

Pair Corralation between Amgen and Zapata Computing

Given the investment horizon of 90 days Amgen Inc is expected to generate 0.08 times more return on investment than Zapata Computing. However, Amgen Inc is 11.77 times less risky than Zapata Computing. It trades about -0.14 of its potential returns per unit of risk. Zapata Computing Holdings is currently generating about -0.27 per unit of risk. If you would invest  32,789  in Amgen Inc on August 31, 2024 and sell it today you would lose (4,782) from holding Amgen Inc or give up 14.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	71.43%
Values	Daily Returns

Amgen Inc  vs.  Zapata Computing Holdings

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 unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Zapata Computing Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zapata Computing Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Amgen and Zapata Computing

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

The idea behind Amgen Inc and Zapata Computing 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.