Correlation Between Johnson Health and Shinkong Insurance
Can any of the company-specific risk be diversified away by investing in both Johnson Health and Shinkong Insurance 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 Shinkong Insurance 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 Shinkong Insurance Co, you can compare the effects of market volatilities on Johnson Health and Shinkong Insurance 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 Shinkong Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Health and Shinkong Insurance.
Diversification Opportunities for Johnson Health and Shinkong Insurance
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Johnson and Shinkong is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Health Tech and Shinkong Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Insurance 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 Shinkong Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Insurance has no effect on the direction of Johnson Health i.e., Johnson Health and Shinkong Insurance go up and down completely randomly.
Pair Corralation between Johnson Health and Shinkong Insurance
Assuming the 90 days trading horizon Johnson Health Tech is expected to under-perform the Shinkong Insurance. In addition to that, Johnson Health is 1.87 times more volatile than Shinkong Insurance Co. It trades about -0.25 of its total potential returns per unit of risk. Shinkong Insurance Co is currently generating about -0.11 per unit of volatility. If you would invest 10,200 in Shinkong Insurance Co on November 28, 2024 and sell it today you would lose (200.00) from holding Shinkong Insurance Co or give up 1.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Health Tech vs. Shinkong Insurance Co
Performance |
| Timeline |
| Johnson Health Tech |
| Shinkong Insurance |
Johnson Health and Shinkong Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Health and Shinkong Insurance
The main advantage of trading using opposite Johnson Health and Shinkong Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Health position performs unexpectedly, Shinkong Insurance 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 Shinkong Insurance will offset losses from the drop in Shinkong Insurance'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 |
| Shinkong Insurance vs. Central Reinsurance Corp | Shinkong Insurance vs. Huaku Development Co | Shinkong Insurance vs. Fubon Financial Holding | Shinkong Insurance vs. Chailease Holding 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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