Correlation Between Johnson Health and Wei Chuan
Can any of the company-specific risk be diversified away by investing in both Johnson Health and Wei Chuan 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 Johnson Health and Wei Chuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Health Tech and Wei Chuan Foods, you can compare the effects of market volatilities on Johnson Health and Wei Chuan 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 Johnson Health with a short position of Wei Chuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Health and Wei Chuan.
Diversification Opportunities for Johnson Health and Wei Chuan
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Johnson and Wei is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Health Tech and Wei Chuan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wei Chuan Foods and Johnson Health 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 Johnson Health Tech are associated (or correlated) with Wei Chuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wei Chuan Foods has no effect on the direction of Johnson Health i.e., Johnson Health and Wei Chuan go up and down completely randomly.
Pair Corralation between Johnson Health and Wei Chuan
Assuming the 90 days trading horizon Johnson Health Tech is expected to generate 4.4 times more return on investment than Wei Chuan. However, Johnson Health is 4.4 times more volatile than Wei Chuan Foods. It trades about 0.1 of its potential returns per unit of risk. Wei Chuan Foods is currently generating about -0.04 per unit of risk. If you would invest 6,610 in Johnson Health Tech on September 2, 2024 and sell it today you would earn a total of 9,140 from holding Johnson Health Tech or generate 138.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Johnson Health Tech vs. Wei Chuan Foods
Performance |
| Timeline |
| Johnson Health Tech |
| Wei Chuan Foods |
Johnson Health and Wei Chuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Health and Wei Chuan
The main advantage of trading using opposite Johnson Health and Wei Chuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Health position performs unexpectedly, Wei Chuan 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 Wei Chuan will offset losses from the drop in Wei Chuan's long position.| Johnson Health vs. Chaintech Technology Corp | Johnson Health vs. Avision | Johnson Health vs. Clevo Co | Johnson Health vs. Elitegroup Computer Systems |
| Wei Chuan vs. Uni President Enterprises Corp | Wei Chuan vs. Taisun Enterprise Co | Wei Chuan vs. AGV Products Corp | Wei Chuan vs. Great Wall Enterprise |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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