Correlation Between Hunya Foods and Johnson Chemical

Can any of the company-specific risk be diversified away by investing in both Hunya Foods and Johnson Chemical 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 Hunya Foods and Johnson Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hunya Foods Co and Johnson Chemical Pharmaceutical, you can compare the effects of market volatilities on Hunya Foods and Johnson Chemical 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 Hunya Foods with a short position of Johnson Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hunya Foods and Johnson Chemical.

Diversification Opportunities for Hunya Foods and Johnson Chemical

0.08

Correlation Coefficient

Hunya Foods  Johnson Chemical

Significant diversification

The 3 months correlation between Hunya and Johnson is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Hunya Foods Co and Johnson Chemical Pharmaceutica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Chemical Pha and Hunya Foods 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 Hunya Foods Co are associated (or correlated) with Johnson Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Chemical Pha has no effect on the direction of Hunya Foods i.e., Hunya Foods and Johnson Chemical go up and down completely randomly.

Pair Corralation between Hunya Foods and Johnson Chemical

Assuming the 90 days trading horizon Hunya Foods Co is not expected to generate positive returns. However, Hunya Foods Co is 2.12 times less risky than Johnson Chemical. It waists most of its returns potential to compensate for thr risk taken. Johnson Chemical is generating about 0.05 per unit of risk. If you would invest  4,279  in Johnson Chemical Pharmaceutical on October 25, 2024 and sell it today you would earn a total of  2,751  from holding Johnson Chemical Pharmaceutical or generate 64.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Hunya Foods Co  vs.  Johnson Chemical Pharmaceutica

Hunya Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hunya Foods Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Hunya Foods is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Johnson Chemical Pha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Johnson Chemical Pharmaceutical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Johnson Chemical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Hunya Foods and Johnson Chemical

The main advantage of trading using opposite Hunya Foods and Johnson Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hunya Foods position performs unexpectedly, Johnson Chemical 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 Johnson Chemical will offset losses from the drop in Johnson Chemical's long position.

The idea behind Hunya Foods Co and Johnson Chemical Pharmaceutical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.