Correlation Between Johnson Chemical and BenQ Medical

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

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

Diversification Opportunities for Johnson Chemical and BenQ Medical

-0.34

Correlation Coefficient

Johnson Chemical  BenQ Medical

Very good diversification

The 3 months correlation between Johnson and BenQ is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Chemical Pharmaceutica and BenQ Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BenQ Medical Technology and Johnson Chemical 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 Chemical Pharmaceutical are associated (or correlated) with BenQ Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BenQ Medical Technology has no effect on the direction of Johnson Chemical i.e., Johnson Chemical and BenQ Medical go up and down completely randomly.

Pair Corralation between Johnson Chemical and BenQ Medical

Assuming the 90 days trading horizon Johnson Chemical Pharmaceutical is expected to generate 1.92 times more return on investment than BenQ Medical. However, Johnson Chemical is 1.92 times more volatile than BenQ Medical Technology. It trades about 0.01 of its potential returns per unit of risk. BenQ Medical Technology is currently generating about -0.06 per unit of risk. If you would invest  6,940  in Johnson Chemical Pharmaceutical on September 5, 2024 and sell it today you would earn a total of  30.00  from holding Johnson Chemical Pharmaceutical or generate 0.43% return on investment over 90 days.

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

Johnson Chemical Pharmaceutica  vs.  BenQ Medical Technology

Johnson Chemical Pha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Johnson Chemical Pharmaceutical has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

BenQ Medical Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BenQ Medical Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, BenQ Medical 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 Chemical and BenQ Medical

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

The idea behind Johnson Chemical Pharmaceutical and BenQ Medical Technology 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.