Correlation Between Johnson Matthey and Helios Towers
Can any of the company-specific risk be diversified away by investing in both Johnson Matthey and Helios Towers 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 Matthey and Helios Towers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Matthey PLC and Helios Towers Plc, you can compare the effects of market volatilities on Johnson Matthey and Helios Towers 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 Matthey with a short position of Helios Towers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Matthey and Helios Towers.
Diversification Opportunities for Johnson Matthey and Helios Towers
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Johnson and Helios is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Matthey PLC and Helios Towers Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helios Towers Plc and Johnson Matthey 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 Matthey PLC are associated (or correlated) with Helios Towers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helios Towers Plc has no effect on the direction of Johnson Matthey i.e., Johnson Matthey and Helios Towers go up and down completely randomly.
Pair Corralation between Johnson Matthey and Helios Towers
Assuming the 90 days trading horizon Johnson Matthey PLC is expected to generate 1.01 times more return on investment than Helios Towers. However, Johnson Matthey is 1.01 times more volatile than Helios Towers Plc. It trades about -0.06 of its potential returns per unit of risk. Helios Towers Plc is currently generating about -0.11 per unit of risk. If you would invest 157,002 in Johnson Matthey PLC on September 23, 2024 and sell it today you would lose (23,402) from holding Johnson Matthey PLC or give up 14.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Matthey PLC vs. Helios Towers Plc
Performance |
| Timeline |
| Johnson Matthey PLC |
| Helios Towers Plc |
Johnson Matthey and Helios Towers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Matthey and Helios Towers
The main advantage of trading using opposite Johnson Matthey and Helios Towers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Matthey position performs unexpectedly, Helios Towers 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 Helios Towers will offset losses from the drop in Helios Towers' long position.| Johnson Matthey vs. Givaudan SA | Johnson Matthey vs. Antofagasta PLC | Johnson Matthey vs. Ferrexpo PLC | Johnson Matthey vs. Atalaya Mining |
| Helios Towers vs. Chocoladefabriken Lindt Spruengli | Helios Towers vs. Rockwood Realisation PLC | Helios Towers vs. Toyota Motor Corp | Helios Towers vs. Johnson Matthey PLC |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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