Correlation Between ANI Pharmaceuticals and Johnson Johnson
Can any of the company-specific risk be diversified away by investing in both ANI Pharmaceuticals and Johnson Johnson 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 ANI Pharmaceuticals and Johnson Johnson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ANI Pharmaceuticals and Johnson Johnson, you can compare the effects of market volatilities on ANI Pharmaceuticals and Johnson Johnson 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 ANI Pharmaceuticals with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANI Pharmaceuticals and Johnson Johnson.
Diversification Opportunities for ANI Pharmaceuticals and Johnson Johnson
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ANI and Johnson is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding ANI Pharmaceuticals and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and ANI Pharmaceuticals 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 ANI Pharmaceuticals are associated (or correlated) with Johnson Johnson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Johnson has no effect on the direction of ANI Pharmaceuticals i.e., ANI Pharmaceuticals and Johnson Johnson go up and down completely randomly.
Pair Corralation between ANI Pharmaceuticals and Johnson Johnson
Given the investment horizon of 90 days ANI Pharmaceuticals is expected to generate 2.06 times more return on investment than Johnson Johnson. However, ANI Pharmaceuticals is 2.06 times more volatile than Johnson Johnson. It trades about 0.01 of its potential returns per unit of risk. Johnson Johnson is currently generating about -0.15 per unit of risk. If you would invest 5,797 in ANI Pharmaceuticals on October 26, 2024 and sell it today you would earn a total of 19.00 from holding ANI Pharmaceuticals or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ANI Pharmaceuticals vs. Johnson Johnson
Performance |
| Timeline |
| ANI Pharmaceuticals |
| Johnson Johnson |
ANI Pharmaceuticals and Johnson Johnson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ANI Pharmaceuticals and Johnson Johnson
The main advantage of trading using opposite ANI Pharmaceuticals and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANI Pharmaceuticals position performs unexpectedly, Johnson Johnson 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 Johnson will offset losses from the drop in Johnson Johnson's long position.| ANI Pharmaceuticals vs. Phibro Animal Health | ANI Pharmaceuticals vs. Prestige Brand Holdings | ANI Pharmaceuticals vs. Alkermes Plc | ANI Pharmaceuticals vs. Dr Reddys Laboratories |
| Johnson Johnson vs. Collegium Pharmaceutical | Johnson Johnson vs. Phibro Animal Health | Johnson Johnson vs. ANI Pharmaceuticals | Johnson Johnson vs. Procaps Group SA |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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