Correlation Between SOUTHERN and Amgen

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

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

Diversification Opportunities for SOUTHERN and Amgen

0.46

Correlation Coefficient

SOUTHERN  Amgen

Very weak diversification

The 3 months correlation between SOUTHERN and Amgen is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHERN PER CORP and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and SOUTHERN 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 SOUTHERN PER CORP 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 SOUTHERN i.e., SOUTHERN and Amgen go up and down completely randomly.

Pair Corralation between SOUTHERN and Amgen

Assuming the 90 days trading horizon SOUTHERN PER CORP is expected to generate 0.21 times more return on investment than Amgen. However, SOUTHERN PER CORP is 4.66 times less risky than Amgen. It trades about 0.0 of its potential returns per unit of risk. Amgen Inc is currently generating about 0.0 per unit of risk. If you would invest  9,846  in SOUTHERN PER CORP on September 20, 2024 and sell it today you would earn a total of  15.00  from holding SOUTHERN PER CORP or generate 0.15% return on investment over 90 days.

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

SOUTHERN PER CORP  vs.  Amgen Inc

SOUTHERN PER P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOUTHERN PER CORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SOUTHERN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with SOUTHERN and Amgen

The main advantage of trading using opposite SOUTHERN and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOUTHERN 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 SOUTHERN PER CORP 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.