Correlation Between Scilex Holding and Amgen

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

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

Diversification Opportunities for Scilex Holding and Amgen

-0.87

Correlation Coefficient

Scilex Holding  Amgen

Pay attention - limited upside

The 3 months correlation between Scilex and Amgen is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Scilex Holding and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Scilex Holding 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 Scilex Holding 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 Scilex Holding i.e., Scilex Holding and Amgen go up and down completely randomly.

Pair Corralation between Scilex Holding and Amgen

Assuming the 90 days horizon Scilex Holding is expected to generate 87.41 times less return on investment than Amgen. In addition to that, Scilex Holding is 12.23 times more volatile than Amgen Inc. It trades about 0.0 of its total potential returns per unit of risk. Amgen Inc is currently generating about 0.23 per unit of volatility. If you would invest  25,910  in Amgen Inc on December 19, 2024 and sell it today you would earn a total of  5,665  from holding Amgen Inc or generate 21.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	93.33%
Values	Daily Returns

Scilex Holding  vs.  Amgen Inc

Scilex Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Scilex Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Scilex Holding is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated 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 18 (%) 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 Scilex Holding and Amgen

The main advantage of trading using opposite Scilex Holding and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scilex Holding 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 Scilex Holding 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.