Correlation Between Johnson Health and Chi Sheng

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

Diversification Opportunities for Johnson Health and Chi Sheng

0.31

Correlation Coefficient

Johnson Health  Chi Sheng

Weak diversification

The 3 months correlation between Johnson and Chi is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Health Tech and Chi Sheng Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Sheng Chemical 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 Chi Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Sheng Chemical has no effect on the direction of Johnson Health i.e., Johnson Health and Chi Sheng go up and down completely randomly.

Pair Corralation between Johnson Health and Chi Sheng

Assuming the 90 days trading horizon Johnson Health is expected to generate 1.48 times less return on investment than Chi Sheng. In addition to that, Johnson Health is 2.68 times more volatile than Chi Sheng Chemical. It trades about 0.02 of its total potential returns per unit of risk. Chi Sheng Chemical is currently generating about 0.09 per unit of volatility. If you would invest  2,755  in Chi Sheng Chemical on December 4, 2024 and sell it today you would earn a total of  170.00  from holding Chi Sheng Chemical or generate 6.17% return on investment over 90 days.

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

Johnson Health Tech  vs.  Chi Sheng Chemical

Johnson Health Tech

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Health Tech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Johnson Health is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chi Sheng Chemical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chi Sheng Chemical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chi Sheng may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Johnson Health and Chi Sheng

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

The idea behind Johnson Health Tech and Chi Sheng Chemical 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.