Correlation Between Summit Therapeutics and Amgen

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

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

Diversification Opportunities for Summit Therapeutics and Amgen

-0.63

Correlation Coefficient

Summit Therapeutics  Amgen

Excellent diversification

The 3 months correlation between Summit and Amgen is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Summit Therapeutics PLC and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Summit Therapeutics 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 Summit Therapeutics PLC 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 Summit Therapeutics i.e., Summit Therapeutics and Amgen go up and down completely randomly.

Pair Corralation between Summit Therapeutics and Amgen

Given the investment horizon of 90 days Summit Therapeutics PLC is expected to generate 4.66 times more return on investment than Amgen. However, Summit Therapeutics is 4.66 times more volatile than Amgen Inc. It trades about 0.07 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.08 per unit of risk. If you would invest  2,050  in Summit Therapeutics PLC on February 10, 2025 and sell it today you would earn a total of  346.00  from holding Summit Therapeutics PLC or generate 16.88% return on investment over 90 days.

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

Summit Therapeutics PLC  vs.  Amgen Inc

Summit Therapeutics PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Therapeutics PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, Summit Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Amgen Inc

Risk-Adjusted Performance

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 conflicting performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Summit Therapeutics and Amgen

The main advantage of trading using opposite Summit Therapeutics and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Therapeutics 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 Summit Therapeutics PLC 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.