Correlation Between Johnson Health and Taiwan Fertilizer
Can any of the company-specific risk be diversified away by investing in both Johnson Health and Taiwan Fertilizer 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 Taiwan Fertilizer 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 Taiwan Fertilizer Co, you can compare the effects of market volatilities on Johnson Health and Taiwan Fertilizer 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 Taiwan Fertilizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Health and Taiwan Fertilizer.
Diversification Opportunities for Johnson Health and Taiwan Fertilizer
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Johnson and Taiwan is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Health Tech and Taiwan Fertilizer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Fertilizer 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 Taiwan Fertilizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Fertilizer has no effect on the direction of Johnson Health i.e., Johnson Health and Taiwan Fertilizer go up and down completely randomly.
Pair Corralation between Johnson Health and Taiwan Fertilizer
Assuming the 90 days trading horizon Johnson Health Tech is expected to under-perform the Taiwan Fertilizer. In addition to that, Johnson Health is 3.4 times more volatile than Taiwan Fertilizer Co. It trades about -0.1 of its total potential returns per unit of risk. Taiwan Fertilizer Co is currently generating about -0.1 per unit of volatility. If you would invest 5,730 in Taiwan Fertilizer Co on September 3, 2024 and sell it today you would lose (140.00) from holding Taiwan Fertilizer Co or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Health Tech vs. Taiwan Fertilizer Co
Performance |
| Timeline |
| Johnson Health Tech |
| Taiwan Fertilizer |
Johnson Health and Taiwan Fertilizer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Health and Taiwan Fertilizer
The main advantage of trading using opposite Johnson Health and Taiwan Fertilizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Health position performs unexpectedly, Taiwan Fertilizer 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 Taiwan Fertilizer will offset losses from the drop in Taiwan Fertilizer's long position.| Johnson Health vs. Tainan Spinning Co | Johnson Health vs. Chia Her Industrial | Johnson Health vs. WiseChip Semiconductor | Johnson Health vs. Novatek Microelectronics Corp |
| Taiwan Fertilizer vs. Taiwan Cement Corp | Taiwan Fertilizer vs. Far Eastern New | Taiwan Fertilizer vs. Asia Cement Corp | Taiwan Fertilizer vs. Formosa Plastics 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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