Correlation Between Johnson Health and Tah Tong

Can any of the company-specific risk be diversified away by investing in both Johnson Health and Tah Tong 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 Tah Tong 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 Tah Tong Textile, you can compare the effects of market volatilities on Johnson Health and Tah Tong 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 Tah Tong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Health and Tah Tong.

Diversification Opportunities for Johnson Health and Tah Tong

-0.52

Correlation Coefficient

Johnson Health  Tah Tong

Excellent diversification

The 3 months correlation between Johnson and Tah is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Health Tech and Tah Tong Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tah Tong Textile 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 Tah Tong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tah Tong Textile has no effect on the direction of Johnson Health i.e., Johnson Health and Tah Tong go up and down completely randomly.

Pair Corralation between Johnson Health and Tah Tong

Assuming the 90 days trading horizon Johnson Health Tech is expected to under-perform the Tah Tong. In addition to that, Johnson Health is 2.99 times more volatile than Tah Tong Textile. It trades about -0.06 of its total potential returns per unit of risk. Tah Tong Textile is currently generating about -0.01 per unit of volatility. If you would invest  1,415  in Tah Tong Textile on October 8, 2024 and sell it today you would lose (5.00) from holding Tah Tong Textile or give up 0.35% of portfolio value over 90 days.

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

Johnson Health Tech  vs.  Tah Tong Textile

Johnson Health Tech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Health Tech are ranked lower than 5 (%) 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.

Tah Tong Textile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tah Tong Textile has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Johnson Health and Tah Tong

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

The idea behind Johnson Health Tech and Tah Tong Textile 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.