Correlation Between Tainan Spinning and Johnson Health
Can any of the company-specific risk be diversified away by investing in both Tainan Spinning 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 Tainan Spinning and Johnson Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tainan Spinning Co and Johnson Health Tech, you can compare the effects of market volatilities on Tainan Spinning 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 Tainan Spinning with a short position of Johnson Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainan Spinning and Johnson Health.
Diversification Opportunities for Tainan Spinning and Johnson Health
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tainan and Johnson is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Spinning Co 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 Tainan Spinning 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 Tainan Spinning Co 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 Tainan Spinning i.e., Tainan Spinning and Johnson Health go up and down completely randomly.
Pair Corralation between Tainan Spinning and Johnson Health
Assuming the 90 days trading horizon Tainan Spinning Co is expected to under-perform the Johnson Health. But the stock apears to be less risky and, when comparing its historical volatility, Tainan Spinning Co is 1.76 times less risky than Johnson Health. The stock trades about -0.01 of its potential returns per unit of risk. The Johnson Health Tech is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7,741 in Johnson Health Tech on September 3, 2024 and sell it today you would earn a total of 8,009 from holding Johnson Health Tech or generate 103.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Tainan Spinning Co vs. Johnson Health Tech
Performance |
| Timeline |
| Tainan Spinning |
| Johnson Health Tech |
Tainan Spinning and Johnson Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tainan Spinning and Johnson Health
The main advantage of trading using opposite Tainan Spinning and Johnson Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Spinning 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.| Tainan Spinning vs. Lealea Enterprise Co | Tainan Spinning vs. China Petrochemical Development | Tainan Spinning vs. Li Peng Enterprise | Tainan Spinning vs. Oriental Union Chemical |
| Johnson Health vs. Tainan Spinning Co | Johnson Health vs. Chia Her Industrial | Johnson Health vs. WiseChip Semiconductor | Johnson Health vs. Novatek Microelectronics 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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