Correlation Between Johnson Matthey and Nanophase Technol
Can any of the company-specific risk be diversified away by investing in both Johnson Matthey and Nanophase Technol 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 Nanophase Technol 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 Nanophase Technol, you can compare the effects of market volatilities on Johnson Matthey and Nanophase Technol 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 Nanophase Technol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Matthey and Nanophase Technol.
Diversification Opportunities for Johnson Matthey and Nanophase Technol
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Johnson and Nanophase is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Matthey Plc and Nanophase Technol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanophase Technol 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 Nanophase Technol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanophase Technol has no effect on the direction of Johnson Matthey i.e., Johnson Matthey and Nanophase Technol go up and down completely randomly.
Pair Corralation between Johnson Matthey and Nanophase Technol
Assuming the 90 days horizon Johnson Matthey Plc is expected to under-perform the Nanophase Technol. But the pink sheet apears to be less risky and, when comparing its historical volatility, Johnson Matthey Plc is 1.47 times less risky than Nanophase Technol. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Nanophase Technol is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 130.00 in Nanophase Technol on August 31, 2024 and sell it today you would earn a total of 10.00 from holding Nanophase Technol or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.07% |
| Values | Daily Returns |
Johnson Matthey Plc vs. Nanophase Technol
Performance |
| Timeline |
| Johnson Matthey Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Nanophase Technol |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Johnson Matthey and Nanophase Technol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Matthey and Nanophase Technol
The main advantage of trading using opposite Johnson Matthey and Nanophase Technol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Matthey position performs unexpectedly, Nanophase Technol 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 Nanophase Technol will offset losses from the drop in Nanophase Technol's long position.| Johnson Matthey vs. Neo Performance Materials | Johnson Matthey vs. Sensient Technologies | Johnson Matthey vs. Koppers Holdings | Johnson Matthey vs. Axalta Coating Systems |
| Nanophase Technol vs. Iofina plc | Nanophase Technol vs. Green Star Products | Nanophase Technol vs. Greystone Logistics | Nanophase Technol vs. Crown Electrokinetics Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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