Correlation Between Johnson Health and CHC Healthcare
Can any of the company-specific risk be diversified away by investing in both Johnson Health and CHC Healthcare 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 CHC Healthcare 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 CHC Healthcare Group, you can compare the effects of market volatilities on Johnson Health and CHC Healthcare 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 CHC Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Health and CHC Healthcare.
Diversification Opportunities for Johnson Health and CHC Healthcare
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Johnson and CHC is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Health Tech and CHC Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHC Healthcare Group 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 CHC Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHC Healthcare Group has no effect on the direction of Johnson Health i.e., Johnson Health and CHC Healthcare go up and down completely randomly.
Pair Corralation between Johnson Health and CHC Healthcare
Assuming the 90 days trading horizon Johnson Health Tech is expected to generate 1.44 times more return on investment than CHC Healthcare. However, Johnson Health is 1.44 times more volatile than CHC Healthcare Group. It trades about 0.1 of its potential returns per unit of risk. CHC Healthcare Group is currently generating about -0.05 per unit of risk. If you would invest 6,610 in Johnson Health Tech on September 2, 2024 and sell it today you would earn a total of 9,140 from holding Johnson Health Tech or generate 138.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Johnson Health Tech vs. CHC Healthcare Group
Performance |
| Timeline |
| Johnson Health Tech |
| CHC Healthcare Group |
Johnson Health and CHC Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Health and CHC Healthcare
The main advantage of trading using opposite Johnson Health and CHC Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Health position performs unexpectedly, CHC Healthcare 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 CHC Healthcare will offset losses from the drop in CHC Healthcare's long position.| Johnson Health vs. Chaintech Technology Corp | Johnson Health vs. Avision | Johnson Health vs. Clevo Co | Johnson Health vs. Elitegroup Computer Systems |
| CHC Healthcare vs. Phytohealth Corp | CHC Healthcare vs. GenMont Biotech | CHC Healthcare vs. Hung Sheng Construction | CHC Healthcare 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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