Correlation Between Est Global and Johnson Chemical

Can any of the company-specific risk be diversified away by investing in both Est Global 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 Est Global and Johnson Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Est Global Apparel and Johnson Chemical Pharmaceutical, you can compare the effects of market volatilities on Est Global 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 Est Global with a short position of Johnson Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Est Global and Johnson Chemical.

Diversification Opportunities for Est Global and Johnson Chemical

0.41

Correlation Coefficient

Est Global  Johnson Chemical

Very weak diversification

The 3 months correlation between Est and Johnson is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Est Global Apparel 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 Est Global 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 Est Global Apparel 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 Est Global i.e., Est Global and Johnson Chemical go up and down completely randomly.

Pair Corralation between Est Global and Johnson Chemical

Assuming the 90 days trading horizon Est Global Apparel is expected to generate 1.17 times more return on investment than Johnson Chemical. However, Est Global is 1.17 times more volatile than Johnson Chemical Pharmaceutical. It trades about 0.05 of its potential returns per unit of risk. Johnson Chemical Pharmaceutical is currently generating about 0.05 per unit of risk. If you would invest  1,730  in Est Global Apparel on December 23, 2024 and sell it today you would earn a total of  90.00  from holding Est Global Apparel or generate 5.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.25%
Values	Daily Returns

Est Global Apparel  vs.  Johnson Chemical Pharmaceutica

Est Global Apparel

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Est Global Apparel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Est Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Johnson Chemical Pha

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Chemical Pharmaceutical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Johnson Chemical 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 Est Global and Johnson Chemical

The main advantage of trading using opposite Est Global and Johnson Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Est Global 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.

The idea behind Est Global Apparel and Johnson Chemical Pharmaceutical 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.