Correlation Between CHC Healthcare and Johnson Health
Can any of the company-specific risk be diversified away by investing in both CHC Healthcare and Johnson Health 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 CHC Healthcare and Johnson Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHC Healthcare Group and Johnson Health Tech, you can compare the effects of market volatilities on CHC Healthcare and Johnson Health 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 CHC Healthcare with a short position of Johnson Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHC Healthcare and Johnson Health.
Diversification Opportunities for CHC Healthcare and Johnson Health
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHC and Johnson is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding CHC Healthcare Group and Johnson Health Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Health Tech and CHC Healthcare 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 CHC Healthcare Group are associated (or correlated) with Johnson Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Health Tech has no effect on the direction of CHC Healthcare i.e., CHC Healthcare and Johnson Health go up and down completely randomly.
Pair Corralation between CHC Healthcare and Johnson Health
Assuming the 90 days trading horizon CHC Healthcare Group is expected to under-perform the Johnson Health. But the stock apears to be less risky and, when comparing its historical volatility, CHC Healthcare Group is 1.44 times less risky than Johnson Health. The stock trades about -0.05 of its potential returns per unit of risk. The Johnson Health Tech is currently generating about 0.1 of returns per unit of risk over similar time horizon. 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 |
CHC Healthcare Group vs. Johnson Health Tech
Performance |
| Timeline |
| CHC Healthcare Group |
| Johnson Health Tech |
CHC Healthcare and Johnson Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHC Healthcare and Johnson Health
The main advantage of trading using opposite CHC Healthcare and Johnson Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHC Healthcare position performs unexpectedly, Johnson Health 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 Johnson Health will offset losses from the drop in Johnson Health's long position.| CHC Healthcare vs. Phytohealth Corp | CHC Healthcare vs. GenMont Biotech | CHC Healthcare vs. Hung Sheng Construction | CHC Healthcare vs. De Licacy Industrial |
| Johnson Health vs. Chaintech Technology Corp | Johnson Health vs. Avision | Johnson Health vs. Clevo Co | Johnson Health vs. Elitegroup Computer 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |