Correlation Between Santen Pharmaceutical and Amgen

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Can any of the company-specific risk be diversified away by investing in both Santen Pharmaceutical 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 Santen Pharmaceutical and Amgen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Santen Pharmaceutical Co and Amgen Inc, you can compare the effects of market volatilities on Santen Pharmaceutical 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 Santen Pharmaceutical with a short position of Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santen Pharmaceutical and Amgen.

Diversification Opportunities for Santen Pharmaceutical and Amgen

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between Santen and Amgen is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Santen Pharmaceutical Co and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Santen Pharmaceutical 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 Santen Pharmaceutical Co 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 Santen Pharmaceutical i.e., Santen Pharmaceutical and Amgen go up and down completely randomly.

Pair Corralation between Santen Pharmaceutical and Amgen

Assuming the 90 days horizon Santen Pharmaceutical Co is expected to under-perform the Amgen. In addition to that, Santen Pharmaceutical is 1.79 times more volatile than Amgen Inc. It trades about -0.16 of its total potential returns per unit of risk. Amgen Inc is currently generating about 0.13 per unit of volatility. If you would invest  27,849  in Amgen Inc on December 29, 2023 and sell it today you would earn a total of  781.00  from holding Amgen Inc or generate 2.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Santen Pharmaceutical Co  vs.  Amgen Inc

 Performance 
       Timeline  
Santen Pharmaceutical 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Santen Pharmaceutical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Santen Pharmaceutical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Amgen Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 very healthy technical and fundamental indicators, Amgen is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Santen Pharmaceutical and Amgen Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Santen Pharmaceutical and Amgen

The main advantage of trading using opposite Santen Pharmaceutical and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santen Pharmaceutical 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 Santen Pharmaceutical Co 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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