Correlation Between Johnson Johnson and COSMOSTEEL HLDGS
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and COSMOSTEEL HLDGS 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 Johnson and COSMOSTEEL HLDGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and COSMOSTEEL HLDGS, you can compare the effects of market volatilities on Johnson Johnson and COSMOSTEEL HLDGS 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 Johnson with a short position of COSMOSTEEL HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and COSMOSTEEL HLDGS.
Diversification Opportunities for Johnson Johnson and COSMOSTEEL HLDGS
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Johnson and COSMOSTEEL is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and COSMOSTEEL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSMOSTEEL HLDGS and Johnson Johnson 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 Johnson are associated (or correlated) with COSMOSTEEL HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSMOSTEEL HLDGS has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and COSMOSTEEL HLDGS go up and down completely randomly.
Pair Corralation between Johnson Johnson and COSMOSTEEL HLDGS
Assuming the 90 days trading horizon Johnson Johnson is expected to under-perform the COSMOSTEEL HLDGS. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 4.1 times less risky than COSMOSTEEL HLDGS. The stock trades about -0.15 of its potential returns per unit of risk. The COSMOSTEEL HLDGS is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 6.05 in COSMOSTEEL HLDGS on September 12, 2024 and sell it today you would earn a total of 1.10 from holding COSMOSTEEL HLDGS or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Johnson Johnson vs. COSMOSTEEL HLDGS
Performance |
| Timeline |
| Johnson Johnson |
| COSMOSTEEL HLDGS |
Johnson Johnson and COSMOSTEEL HLDGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and COSMOSTEEL HLDGS
The main advantage of trading using opposite Johnson Johnson and COSMOSTEEL HLDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, COSMOSTEEL HLDGS 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 COSMOSTEEL HLDGS will offset losses from the drop in COSMOSTEEL HLDGS's long position.| Johnson Johnson vs. British American Tobacco | Johnson Johnson vs. Mobilezone Holding AG | Johnson Johnson vs. Japan Tobacco | Johnson Johnson vs. Perseus Mining Limited |
| COSMOSTEEL HLDGS vs. Apple Inc | COSMOSTEEL HLDGS vs. Apple Inc | COSMOSTEEL HLDGS vs. Apple Inc | COSMOSTEEL HLDGS vs. Apple Inc |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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