Correlation Between Johnson Health and Universal Microelectronics
Can any of the company-specific risk be diversified away by investing in both Johnson Health and Universal Microelectronics 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 Universal Microelectronics 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 Universal Microelectronics Co, you can compare the effects of market volatilities on Johnson Health and Universal Microelectronics 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 Universal Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Health and Universal Microelectronics.
Diversification Opportunities for Johnson Health and Universal Microelectronics
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Johnson and Universal is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Health Tech and Universal Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Microelectronics 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 Universal Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Microelectronics has no effect on the direction of Johnson Health i.e., Johnson Health and Universal Microelectronics go up and down completely randomly.
Pair Corralation between Johnson Health and Universal Microelectronics
Assuming the 90 days trading horizon Johnson Health Tech is expected to generate 0.97 times more return on investment than Universal Microelectronics. However, Johnson Health Tech is 1.03 times less risky than Universal Microelectronics. It trades about 0.48 of its potential returns per unit of risk. Universal Microelectronics Co is currently generating about -0.08 per unit of risk. If you would invest 14,000 in Johnson Health Tech on September 15, 2024 and sell it today you would earn a total of 5,550 from holding Johnson Health Tech or generate 39.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Health Tech vs. Universal Microelectronics Co
Performance |
| Timeline |
| Johnson Health Tech |
| Universal Microelectronics |
Johnson Health and Universal Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Health and Universal Microelectronics
The main advantage of trading using opposite Johnson Health and Universal Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Health position performs unexpectedly, Universal Microelectronics 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 Universal Microelectronics will offset losses from the drop in Universal Microelectronics' 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 |
| Universal Microelectronics vs. Johnson Health Tech | Universal Microelectronics vs. Mitake Information | Universal Microelectronics vs. Chi Hua Fitness | Universal Microelectronics vs. Mercuries Data Systems |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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