Correlation Between Johnson Johnson and China Southern
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and China Southern 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 China Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and China Southern Airlines, you can compare the effects of market volatilities on Johnson Johnson and China Southern 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 China Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and China Southern.
Diversification Opportunities for Johnson Johnson and China Southern
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Johnson and China is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and China Southern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Southern Airlines 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 China Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Southern Airlines has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and China Southern go up and down completely randomly.
Pair Corralation between Johnson Johnson and China Southern
If you would invest 3,697 in China Southern Airlines on August 30, 2024 and sell it today you would earn a total of 0.00 from holding China Southern Airlines or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
Johnson Johnson vs. China Southern Airlines
Performance |
| Timeline |
| Johnson Johnson |
| China Southern Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Johnson Johnson and China Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and China Southern
The main advantage of trading using opposite Johnson Johnson and China Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, China Southern 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 China Southern will offset losses from the drop in China Southern's long position.| Johnson Johnson vs. Emergent Biosolutions | Johnson Johnson vs. Bausch Health Companies | Johnson Johnson vs. Neurocrine Biosciences | Johnson Johnson vs. Teva Pharma Industries |
| China Southern vs. LAir Liquide SA | China Southern vs. Corporacion America Airports | China Southern vs. Mayfair Gold Corp | China Southern vs. Insteel Industries |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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