Correlation Between Sony and Amgen

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

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

Diversification Opportunities for Sony and Amgen

-0.38

Correlation Coefficient

Sony  Amgen

Very good diversification

The 3 months correlation between Sony and Amgen is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Sony 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 Sony Group 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 Sony i.e., Sony and Amgen go up and down completely randomly.

Pair Corralation between Sony and Amgen

Assuming the 90 days trading horizon Sony Group is expected to generate 0.92 times more return on investment than Amgen. However, Sony Group is 1.09 times less risky than Amgen. It trades about 0.06 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.09 per unit of risk. If you would invest  38,520  in Sony Group on August 30, 2024 and sell it today you would earn a total of  2,280  from holding Sony Group or generate 5.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Sony Group  vs.  Amgen Inc

Sony Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sony Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Sony may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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 latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Sony and Amgen

The main advantage of trading using opposite Sony and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony 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 Sony Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.