Correlation Between Standard Foods and Johnson Health
Can any of the company-specific risk be diversified away by investing in both Standard Foods and Johnson Health 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 Standard Foods and Johnson Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Foods Corp and Johnson Health Tech, you can compare the effects of market volatilities on Standard Foods and Johnson Health 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 Standard Foods with a short position of Johnson Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Foods and Johnson Health.
Diversification Opportunities for Standard Foods and Johnson Health
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Standard and Johnson is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Standard Foods Corp and Johnson Health Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Health Tech and Standard Foods 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 Standard Foods Corp are associated (or correlated) with Johnson Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Health Tech has no effect on the direction of Standard Foods i.e., Standard Foods and Johnson Health go up and down completely randomly.
Pair Corralation between Standard Foods and Johnson Health
Assuming the 90 days trading horizon Standard Foods Corp is expected to generate 0.13 times more return on investment than Johnson Health. However, Standard Foods Corp is 7.86 times less risky than Johnson Health. It trades about 0.02 of its potential returns per unit of risk. Johnson Health Tech is currently generating about 0.0 per unit of risk. If you would invest 3,755 in Standard Foods Corp on August 30, 2024 and sell it today you would earn a total of 10.00 from holding Standard Foods Corp or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Foods Corp vs. Johnson Health Tech
Performance |
| Timeline |
| Standard Foods Corp |
| Johnson Health Tech |
Standard Foods and Johnson Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Foods and Johnson Health
The main advantage of trading using opposite Standard Foods and Johnson Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Foods position performs unexpectedly, Johnson Health 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 Johnson Health will offset losses from the drop in Johnson Health's long position.| Standard Foods vs. Uni President Enterprises Corp | Standard Foods vs. TTET Union Corp | Standard Foods vs. President Chain Store | Standard Foods vs. Charoen Pokphand Enterprise |
| Johnson Health vs. Taiwan Fertilizer Co | Johnson Health vs. Giant Manufacturing Co | Johnson Health vs. Grape King Bio | Johnson Health vs. Rexon Industrial Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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