Correlation Between Bayer Aktiengesellscha and Amgen

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

By analyzing existing cross correlation between Bayer Aktiengesellschaft and Amgen Inc, you can compare the effects of market volatilities on Bayer Aktiengesellscha and Amgen 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 Bayer Aktiengesellscha with a short position of Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayer Aktiengesellscha and Amgen.

Diversification Opportunities for Bayer Aktiengesellscha and Amgen

0.81

Correlation Coefficient

Bayer Aktiengesellscha  Amgen

Very poor diversification

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

Pair Corralation between Bayer Aktiengesellscha and Amgen

Assuming the 90 days trading horizon Bayer Aktiengesellschaft is expected to generate 3.32 times more return on investment than Amgen. However, Bayer Aktiengesellscha is 3.32 times more volatile than Amgen Inc. It trades about 0.07 of its potential returns per unit of risk. Amgen Inc is currently generating about 0.16 per unit of risk. If you would invest  496.00  in Bayer Aktiengesellschaft on December 28, 2024 and sell it today you would earn a total of  79.00  from holding Bayer Aktiengesellschaft or generate 15.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Bayer Aktiengesellschaft  vs.  Amgen Inc

Bayer Aktiengesellschaft

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bayer Aktiengesellschaft are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Bayer Aktiengesellscha reported solid returns over the last few months and may actually be approaching a breakup point.

Amgen Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amgen Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Amgen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bayer Aktiengesellscha and Amgen

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

The idea behind Bayer Aktiengesellschaft and Amgen Inc 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.