Correlation Between Johnson Health and An Shin

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

By analyzing existing cross correlation between Johnson Health Tech and An Shin Food Services, you can compare the effects of market volatilities on Johnson Health and An Shin 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 Health with a short position of An Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Health and An Shin.

Diversification Opportunities for Johnson Health and An Shin

-0.63

Correlation Coefficient

Johnson Health  An Shin

Excellent diversification

The 3 months correlation between Johnson and 1259 is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Health Tech and An Shin Food Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on An Shin Food and Johnson Health 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 Health Tech are associated (or correlated) with An Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of An Shin Food has no effect on the direction of Johnson Health i.e., Johnson Health and An Shin go up and down completely randomly.

Pair Corralation between Johnson Health and An Shin

Assuming the 90 days trading horizon Johnson Health Tech is expected to generate 6.11 times more return on investment than An Shin. However, Johnson Health is 6.11 times more volatile than An Shin Food Services. It trades about 0.12 of its potential returns per unit of risk. An Shin Food Services is currently generating about -0.15 per unit of risk. If you would invest  14,800  in Johnson Health Tech on October 26, 2024 and sell it today you would earn a total of  4,150  from holding Johnson Health Tech or generate 28.04% return on investment over 90 days.

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

Johnson Health Tech  vs.  An Shin Food Services

Johnson Health Tech

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Health Tech are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Johnson Health showed solid returns over the last few months and may actually be approaching a breakup point.

An Shin Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days An Shin Food Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, An Shin 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 Johnson Health and An Shin

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

The idea behind Johnson Health Tech and An Shin Food Services 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.