Correlation Between Johnson Health and Mercuries Life
Can any of the company-specific risk be diversified away by investing in both Johnson Health and Mercuries Life 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 Mercuries Life 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 Mercuries Life Insurance, you can compare the effects of market volatilities on Johnson Health and Mercuries Life 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 Mercuries Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Health and Mercuries Life.
Diversification Opportunities for Johnson Health and Mercuries Life
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Johnson and Mercuries is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Health Tech and Mercuries Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercuries Life 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 Mercuries Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercuries Life Insurance has no effect on the direction of Johnson Health i.e., Johnson Health and Mercuries Life go up and down completely randomly.
Pair Corralation between Johnson Health and Mercuries Life
Assuming the 90 days trading horizon Johnson Health Tech is expected to generate 2.16 times more return on investment than Mercuries Life. However, Johnson Health is 2.16 times more volatile than Mercuries Life Insurance. It trades about 0.12 of its potential returns per unit of risk. Mercuries Life Insurance is currently generating about 0.01 per unit of risk. If you would invest 9,070 in Johnson Health Tech on November 28, 2024 and sell it today you would earn a total of 7,580 from holding Johnson Health Tech or generate 83.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Health Tech vs. Mercuries Life Insurance
Performance |
| Timeline |
| Johnson Health Tech |
| Mercuries Life Insurance |
Johnson Health and Mercuries Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Health and Mercuries Life
The main advantage of trading using opposite Johnson Health and Mercuries Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Health position performs unexpectedly, Mercuries Life 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 Mercuries Life will offset losses from the drop in Mercuries Life'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 |
| Mercuries Life vs. CSBC Corp Taiwan | Mercuries Life vs. Hung Sheng Construction | Mercuries Life vs. Ton Yi Industrial | Mercuries Life vs. De Licacy Industrial |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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