Correlation Between Kodiak Sciences and Amgen

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

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

Diversification Opportunities for Kodiak Sciences and Amgen

-0.93

Correlation Coefficient

Kodiak Sciences  Amgen

Pay attention - limited upside

The 3 months correlation between Kodiak and Amgen is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Sciences and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Kodiak Sciences 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 Kodiak Sciences 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 Kodiak Sciences i.e., Kodiak Sciences and Amgen go up and down completely randomly.

Pair Corralation between Kodiak Sciences and Amgen

Considering the 90-day investment horizon Kodiak Sciences is expected to generate 4.49 times more return on investment than Amgen. However, Kodiak Sciences is 4.49 times more volatile than Amgen Inc. It trades about 0.2 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.13 per unit of risk. If you would invest  354.00  in Kodiak Sciences on October 23, 2024 and sell it today you would earn a total of  363.00  from holding Kodiak Sciences or generate 102.54% return on investment over 90 days.

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

Kodiak Sciences  vs.  Amgen Inc

Kodiak Sciences

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Sciences are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Kodiak Sciences exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Kodiak Sciences and Amgen

The main advantage of trading using opposite Kodiak Sciences and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kodiak Sciences 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 Kodiak Sciences 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.