Correlation Between Johnson Health and Alexander Marine
Can any of the company-specific risk be diversified away by investing in both Johnson Health and Alexander Marine 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 Alexander Marine 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 Alexander Marine Co, you can compare the effects of market volatilities on Johnson Health and Alexander Marine 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 Alexander Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Health and Alexander Marine.
Diversification Opportunities for Johnson Health and Alexander Marine
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Johnson and Alexander is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Health Tech and Alexander Marine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexander Marine 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 Alexander Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexander Marine has no effect on the direction of Johnson Health i.e., Johnson Health and Alexander Marine go up and down completely randomly.
Pair Corralation between Johnson Health and Alexander Marine
Assuming the 90 days trading horizon Johnson Health Tech is expected to generate 2.45 times more return on investment than Alexander Marine. However, Johnson Health is 2.45 times more volatile than Alexander Marine Co. It trades about 0.1 of its potential returns per unit of risk. Alexander Marine Co is currently generating about -0.29 per unit of risk. If you would invest 13,250 in Johnson Health Tech on August 25, 2024 and sell it today you would earn a total of 1,950 from holding Johnson Health Tech or generate 14.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Health Tech vs. Alexander Marine Co
Performance |
| Timeline |
| Johnson Health Tech |
| Alexander Marine |
Johnson Health and Alexander Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Health and Alexander Marine
The main advantage of trading using opposite Johnson Health and Alexander Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Health position performs unexpectedly, Alexander Marine 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 Alexander Marine will offset losses from the drop in Alexander Marine's long position.| Johnson Health vs. Taiwan Semiconductor Manufacturing | Johnson Health vs. Hon Hai Precision | Johnson Health vs. MediaTek | Johnson Health vs. Chunghwa Telecom Co |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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