Correlation Between Johnson Chemical and Yuan High
Can any of the company-specific risk be diversified away by investing in both Johnson Chemical and Yuan High 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 Chemical and Yuan High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Chemical Pharmaceutical and Yuan High Tech Development, you can compare the effects of market volatilities on Johnson Chemical and Yuan High 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 Chemical with a short position of Yuan High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Chemical and Yuan High.
Diversification Opportunities for Johnson Chemical and Yuan High
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Johnson and Yuan is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Chemical Pharmaceutica and Yuan High Tech Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuan High Tech and Johnson Chemical 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 Chemical Pharmaceutical are associated (or correlated) with Yuan High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuan High Tech has no effect on the direction of Johnson Chemical i.e., Johnson Chemical and Yuan High go up and down completely randomly.
Pair Corralation between Johnson Chemical and Yuan High
Assuming the 90 days trading horizon Johnson Chemical Pharmaceutical is expected to generate 0.77 times more return on investment than Yuan High. However, Johnson Chemical Pharmaceutical is 1.29 times less risky than Yuan High. It trades about 0.02 of its potential returns per unit of risk. Yuan High Tech Development is currently generating about -0.02 per unit of risk. If you would invest 6,980 in Johnson Chemical Pharmaceutical on September 12, 2024 and sell it today you would earn a total of 100.00 from holding Johnson Chemical Pharmaceutical or generate 1.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Chemical Pharmaceutica vs. Yuan High Tech Development
Performance |
| Timeline |
| Johnson Chemical Pha |
| Yuan High Tech |
Johnson Chemical and Yuan High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Chemical and Yuan High
The main advantage of trading using opposite Johnson Chemical and Yuan High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Chemical position performs unexpectedly, Yuan High 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 Yuan High will offset losses from the drop in Yuan High's long position.| Johnson Chemical vs. Apex Biotechnology Corp | Johnson Chemical vs. Ruentex Development Co | Johnson Chemical vs. WiseChip Semiconductor | Johnson Chemical vs. Novatek Microelectronics Corp |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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