Correlation Between Johnson Health and Chung Hung
Can any of the company-specific risk be diversified away by investing in both Johnson Health and Chung Hung 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 Chung Hung 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 Chung Hung Steel, you can compare the effects of market volatilities on Johnson Health and Chung Hung 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 Chung Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Health and Chung Hung.
Diversification Opportunities for Johnson Health and Chung Hung
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Johnson and Chung is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Health Tech and Chung Hung Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hung Steel 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 Chung Hung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hung Steel has no effect on the direction of Johnson Health i.e., Johnson Health and Chung Hung go up and down completely randomly.
Pair Corralation between Johnson Health and Chung Hung
Assuming the 90 days trading horizon Johnson Health Tech is expected to generate 1.94 times more return on investment than Chung Hung. However, Johnson Health is 1.94 times more volatile than Chung Hung Steel. It trades about 0.0 of its potential returns per unit of risk. Chung Hung Steel is currently generating about -0.03 per unit of risk. If you would invest 15,350 in Johnson Health Tech on August 30, 2024 and sell it today you would lose (300.00) from holding Johnson Health Tech or give up 1.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Johnson Health Tech vs. Chung Hung Steel
Performance |
| Timeline |
| Johnson Health Tech |
| Chung Hung Steel |
Johnson Health and Chung Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Health and Chung Hung
The main advantage of trading using opposite Johnson Health and Chung Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Health position performs unexpectedly, Chung Hung 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 Chung Hung will offset losses from the drop in Chung Hung's long position.| Johnson Health vs. Taiwan Fertilizer Co | Johnson Health vs. Giant Manufacturing Co | Johnson Health vs. Grape King Bio | Johnson Health vs. Rexon Industrial Corp |
| Chung Hung vs. China Steel Corp | Chung Hung vs. Yieh Phui Enterprise | Chung Hung vs. Ta Chen Stainless | Chung Hung vs. Yang Ming Marine |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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