Correlation Between Johnson Health and Macauto Industrial

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

Diversification Opportunities for Johnson Health and Macauto Industrial

-0.11

Correlation Coefficient

Johnson Health  Macauto Industrial

Good diversification

The 3 months correlation between Johnson and Macauto is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Health Tech and Macauto Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macauto Industrial 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 Macauto Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macauto Industrial has no effect on the direction of Johnson Health i.e., Johnson Health and Macauto Industrial go up and down completely randomly.

Pair Corralation between Johnson Health and Macauto Industrial

Assuming the 90 days trading horizon Johnson Health Tech is expected to generate 2.55 times more return on investment than Macauto Industrial. However, Johnson Health is 2.55 times more volatile than Macauto Industrial Co. It trades about 0.02 of its potential returns per unit of risk. Macauto Industrial Co is currently generating about 0.04 per unit of risk. If you would invest  19,000  in Johnson Health Tech on December 23, 2024 and sell it today you would earn a total of  200.00  from holding Johnson Health Tech or generate 1.05% return on investment over 90 days.

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

Johnson Health Tech  vs.  Macauto Industrial Co

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.

Macauto Industrial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Macauto Industrial Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Macauto Industrial 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 Macauto Industrial

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

The idea behind Johnson Health Tech and Macauto Industrial Co 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.