Correlation Between Cidara Therapeutics and Amgen

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

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

Diversification Opportunities for Cidara Therapeutics and Amgen

-0.18

Correlation Coefficient

Cidara Therapeutics  Amgen

Good diversification

The 3 months correlation between Cidara and Amgen is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cidara Therapeutics and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Cidara Therapeutics 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 Cidara Therapeutics 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 Cidara Therapeutics i.e., Cidara Therapeutics and Amgen go up and down completely randomly.

Pair Corralation between Cidara Therapeutics and Amgen

Given the investment horizon of 90 days Cidara Therapeutics is expected to generate 5.12 times less return on investment than Amgen. In addition to that, Cidara Therapeutics is 2.98 times more volatile than Amgen Inc. It trades about 0.01 of its total potential returns per unit of risk. Amgen Inc is currently generating about 0.22 per unit of volatility. If you would invest  26,127  in Amgen Inc on December 20, 2024 and sell it today you would earn a total of  5,448  from holding Amgen Inc or generate 20.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Cidara Therapeutics  vs.  Amgen Inc

Cidara Therapeutics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cidara Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Cidara Therapeutics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Amgen Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amgen Inc are ranked lower than 17 (%) 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.

Pair Trading with Cidara Therapeutics and Amgen

The main advantage of trading using opposite Cidara Therapeutics and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cidara Therapeutics 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 Cidara Therapeutics 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.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.