Correlation Between Falcon Power and Johnson Health
Can any of the company-specific risk be diversified away by investing in both Falcon Power 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 Falcon Power and Johnson Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Power Co and Johnson Health Tech, you can compare the effects of market volatilities on Falcon Power 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 Falcon Power with a short position of Johnson Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Power and Johnson Health.
Diversification Opportunities for Falcon Power and Johnson Health
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Falcon and Johnson is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Power 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 Falcon Power 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 Falcon Power 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 Falcon Power i.e., Falcon Power and Johnson Health go up and down completely randomly.
Pair Corralation between Falcon Power and Johnson Health
Assuming the 90 days trading horizon Falcon Power Co is expected to under-perform the Johnson Health. But the stock apears to be less risky and, when comparing its historical volatility, Falcon Power Co is 1.78 times less risky than Johnson Health. The stock trades about -0.11 of its potential returns per unit of risk. The Johnson Health Tech is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 13,250 in Johnson Health Tech on August 25, 2024 and sell it today you would earn a total of 1,950 from holding Johnson Health Tech or generate 14.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Power Co vs. Johnson Health Tech
Performance |
| Timeline |
| Falcon Power |
| Johnson Health Tech |
Falcon Power and Johnson Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Power and Johnson Health
The main advantage of trading using opposite Falcon Power and Johnson Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Power 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.| Falcon Power vs. Lee Chi Enterprises | Falcon Power vs. Fortune Electric Co | Falcon Power vs. Kaulin Mfg | Falcon Power vs. Klingon Aerospace |
| Johnson Health vs. Taiwan Semiconductor Manufacturing | Johnson Health vs. Hon Hai Precision | Johnson Health vs. MediaTek | Johnson Health vs. Chunghwa Telecom Co |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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