Correlation Between Johnson Health and Ingentec

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

Diversification Opportunities for Johnson Health and Ingentec

-0.73

Correlation Coefficient

Johnson Health  Ingentec

Pay attention - limited upside

The 3 months correlation between Johnson and Ingentec is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Health Tech and Ingentec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingentec 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 Ingentec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingentec has no effect on the direction of Johnson Health i.e., Johnson Health and Ingentec go up and down completely randomly.

Pair Corralation between Johnson Health and Ingentec

Assuming the 90 days trading horizon Johnson Health Tech is expected to under-perform the Ingentec. In addition to that, Johnson Health is 2.25 times more volatile than Ingentec. It trades about -0.06 of its total potential returns per unit of risk. Ingentec is currently generating about -0.05 per unit of volatility. If you would invest  18,650  in Ingentec on October 10, 2024 and sell it today you would lose (400.00) from holding Ingentec or give up 2.14% of portfolio value over 90 days.

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

Johnson Health Tech  vs.  Ingentec

Johnson Health Tech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Health Tech are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Johnson Health showed solid returns over the last few months and may actually be approaching a breakup point.

Ingentec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ingentec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Johnson Health and Ingentec

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

The idea behind Johnson Health Tech and Ingentec 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.