Correlation Between Amgen and Modernland Realty

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

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

Diversification Opportunities for Amgen and Modernland Realty

-0.42

Correlation Coefficient

Amgen  Modernland Realty

Very good diversification

The 3 months correlation between Amgen and Modernland is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Modernland Realty Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modernland Realty and Amgen 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 Amgen Inc are associated (or correlated) with Modernland Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modernland Realty has no effect on the direction of Amgen i.e., Amgen and Modernland Realty go up and down completely randomly.

Pair Corralation between Amgen and Modernland Realty

If you would invest  29,737  in Amgen Inc on March 7, 2024 and sell it today you would earn a total of  1,001  from holding Amgen Inc or generate 3.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	81.82%
Values	Daily Returns

Amgen Inc  vs.  Modernland Realty Ltd

Amgen Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amgen Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, Amgen displayed solid returns over the last few months and may actually be approaching a breakup point.

Modernland Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Modernland Realty Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Amgen and Modernland Realty

The main advantage of trading using opposite Amgen and Modernland Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Modernland Realty 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 Modernland Realty will offset losses from the drop in Modernland Realty's long position.

The idea behind Amgen Inc and Modernland Realty Ltd 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.