Correlation Between Johnson Matthey and Kronos Worldwide
Can any of the company-specific risk be diversified away by investing in both Johnson Matthey and Kronos Worldwide 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 Kronos Worldwide 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 Kronos Worldwide, you can compare the effects of market volatilities on Johnson Matthey and Kronos Worldwide 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 Kronos Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Matthey and Kronos Worldwide.
Diversification Opportunities for Johnson Matthey and Kronos Worldwide
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Johnson and Kronos is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Matthey PLC and Kronos Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Worldwide 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 Kronos Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Worldwide has no effect on the direction of Johnson Matthey i.e., Johnson Matthey and Kronos Worldwide go up and down completely randomly.
Pair Corralation between Johnson Matthey and Kronos Worldwide
Assuming the 90 days horizon Johnson Matthey PLC is expected to under-perform the Kronos Worldwide. But the pink sheet apears to be less risky and, when comparing its historical volatility, Johnson Matthey PLC is 1.55 times less risky than Kronos Worldwide. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Kronos Worldwide is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 833.00 in Kronos Worldwide on August 26, 2024 and sell it today you would earn a total of 335.00 from holding Kronos Worldwide or generate 40.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Matthey PLC vs. Kronos Worldwide
Performance |
| Timeline |
| Johnson Matthey PLC |
| Kronos Worldwide |
Johnson Matthey and Kronos Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Matthey and Kronos Worldwide
The main advantage of trading using opposite Johnson Matthey and Kronos Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Matthey position performs unexpectedly, Kronos Worldwide 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 Kronos Worldwide will offset losses from the drop in Kronos Worldwide's long position.| Johnson Matthey vs. First Graphene | Johnson Matthey vs. HUMANA INC | Johnson Matthey vs. Aquagold International | Johnson Matthey vs. Barloworld Ltd ADR |
| Kronos Worldwide vs. Oil Dri | Kronos Worldwide vs. Quaker Chemical | Kronos Worldwide vs. Ecovyst | Kronos Worldwide vs. Minerals Technologies |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| 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 | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| CEOs Directory Screen CEOs from public companies around the world |