Correlation Between Johnson Johnson and APT Satellite
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and APT Satellite 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 APT Satellite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and APT Satellite Holdings, you can compare the effects of market volatilities on Johnson Johnson and APT Satellite 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 APT Satellite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and APT Satellite.
Diversification Opportunities for Johnson Johnson and APT Satellite
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Johnson and APT is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and APT Satellite Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APT Satellite Holdings 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 APT Satellite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APT Satellite Holdings has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and APT Satellite go up and down completely randomly.
Pair Corralation between Johnson Johnson and APT Satellite
Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the APT Satellite. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 2.49 times less risky than APT Satellite. The stock trades about -0.02 of its potential returns per unit of risk. The APT Satellite Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 23.00 in APT Satellite Holdings on September 12, 2024 and sell it today you would earn a total of 5.00 from holding APT Satellite Holdings or generate 21.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 20.24% |
| Values | Daily Returns |
Johnson Johnson vs. APT Satellite Holdings
Performance |
| Timeline |
| Johnson Johnson |
| APT Satellite Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Johnson Johnson and APT Satellite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and APT Satellite
The main advantage of trading using opposite Johnson Johnson and APT Satellite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, APT Satellite 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 APT Satellite will offset losses from the drop in APT Satellite's long position.| Johnson Johnson vs. Victory Integrity Smallmid Cap | Johnson Johnson vs. Hilton Worldwide Holdings | Johnson Johnson vs. NVIDIA | Johnson Johnson vs. JPMorgan Chase Co |
| APT Satellite vs. Verizon Communications | APT Satellite vs. T Mobile | APT Satellite vs. Lumen Technologies | APT Satellite vs. Comcast 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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