Correlation Between Amgen and Aldeyra

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

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

Diversification Opportunities for Amgen and Aldeyra

-0.48

Correlation Coefficient

Amgen  Aldeyra

Very good diversification

The 3 months correlation between Amgen and Aldeyra is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Aldeyra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldeyra 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 Aldeyra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldeyra has no effect on the direction of Amgen i.e., Amgen and Aldeyra go up and down completely randomly.

Pair Corralation between Amgen and Aldeyra

Given the investment horizon of 90 days Amgen Inc is expected to under-perform the Aldeyra. But the stock apears to be less risky and, when comparing its historical volatility, Amgen Inc is 4.54 times less risky than Aldeyra. The stock trades about -0.11 of its potential returns per unit of risk. The Aldeyra is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  327.00  in Aldeyra on February 1, 2024 and sell it today you would earn a total of  67.00  from holding Aldeyra or generate 20.49% return on investment over 90 days.

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

Amgen Inc  vs.  Aldeyra

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 June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Aldeyra

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aldeyra are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Aldeyra showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amgen and Aldeyra

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

The idea behind Amgen Inc and Aldeyra 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.