Correlation Between Celgene and Amgen

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

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

Diversification Opportunities for Celgene and Amgen

0.0

Correlation Coefficient

Celgene  Amgen

Pay attention - limited upside

The 3 months correlation between Celgene and Amgen is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Celgene and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Celgene 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 Celgene 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 Celgene i.e., Celgene and Amgen go up and down completely randomly.

Pair Corralation between Celgene and Amgen

If you would invest  26,809  in Amgen Inc on February 4, 2024 and sell it today you would earn a total of  4,320  from holding Amgen Inc or generate 16.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Celgene  vs.  Amgen Inc

Celgene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celgene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Celgene is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 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.

Pair Trading with Celgene and Amgen

The main advantage of trading using opposite Celgene and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celgene 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 Celgene 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.