Correlation Between Puma Biotechnology and Amgen

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

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

Diversification Opportunities for Puma Biotechnology and Amgen

0.22

Correlation Coefficient

Puma Biotechnology  Amgen

Modest diversification

The 3 months correlation between Puma and Amgen is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Puma Biotechnology and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Puma Biotechnology 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 Puma Biotechnology 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 Puma Biotechnology i.e., Puma Biotechnology and Amgen go up and down completely randomly.

Pair Corralation between Puma Biotechnology and Amgen

Given the investment horizon of 90 days Puma Biotechnology is expected to generate 2.11 times less return on investment than Amgen. In addition to that, Puma Biotechnology is 3.18 times more volatile than Amgen Inc. It trades about 0.03 of its total potential returns per unit of risk. Amgen Inc is currently generating about 0.18 per unit of volatility. If you would invest  26,107  in Amgen Inc on December 26, 2024 and sell it today you would earn a total of  4,464  from holding Amgen Inc or generate 17.1% return on investment over 90 days.

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

Puma Biotechnology  vs.  Amgen Inc

Puma Biotechnology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Puma Biotechnology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Puma Biotechnology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Amgen Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amgen Inc are ranked lower than 14 (%) 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 Puma Biotechnology and Amgen

The main advantage of trading using opposite Puma Biotechnology and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Puma Biotechnology 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 Puma Biotechnology 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.