Correlation Between CHC Healthcare and Johnson Chemical
Can any of the company-specific risk be diversified away by investing in both CHC Healthcare and Johnson Chemical 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 CHC Healthcare and Johnson Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHC Healthcare Group and Johnson Chemical Pharmaceutical, you can compare the effects of market volatilities on CHC Healthcare and Johnson Chemical 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 CHC Healthcare with a short position of Johnson Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHC Healthcare and Johnson Chemical.
Diversification Opportunities for CHC Healthcare and Johnson Chemical
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHC and Johnson is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding CHC Healthcare Group and Johnson Chemical Pharmaceutica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Chemical Pha and CHC Healthcare 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 CHC Healthcare Group are associated (or correlated) with Johnson Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Chemical Pha has no effect on the direction of CHC Healthcare i.e., CHC Healthcare and Johnson Chemical go up and down completely randomly.
Pair Corralation between CHC Healthcare and Johnson Chemical
Assuming the 90 days trading horizon CHC Healthcare Group is expected to under-perform the Johnson Chemical. But the stock apears to be less risky and, when comparing its historical volatility, CHC Healthcare Group is 2.37 times less risky than Johnson Chemical. The stock trades about 0.0 of its potential returns per unit of risk. The Johnson Chemical Pharmaceutical is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,910 in Johnson Chemical Pharmaceutical on September 26, 2024 and sell it today you would earn a total of 260.00 from holding Johnson Chemical Pharmaceutical or generate 3.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
CHC Healthcare Group vs. Johnson Chemical Pharmaceutica
Performance |
Timeline |
CHC Healthcare Group |
Johnson Chemical Pha |
CHC Healthcare and Johnson Chemical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CHC Healthcare and Johnson Chemical
The main advantage of trading using opposite CHC Healthcare and Johnson Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHC Healthcare position performs unexpectedly, Johnson Chemical 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 Johnson Chemical will offset losses from the drop in Johnson Chemical's long position.CHC Healthcare vs. Phytohealth Corp | CHC Healthcare vs. GenMont Biotech | CHC Healthcare vs. Hung Sheng Construction | CHC Healthcare vs. De Licacy Industrial |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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