Correlation Between Johnson Chemical and Jinan Acetate

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

Diversification Opportunities for Johnson Chemical and Jinan Acetate

0.82

Correlation Coefficient

Johnson Chemical  Jinan Acetate

Very poor diversification

The 3 months correlation between Johnson and Jinan is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Chemical Pharmaceutica and Jinan Acetate Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinan Acetate Chemical 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 Jinan Acetate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinan Acetate Chemical has no effect on the direction of Johnson Chemical i.e., Johnson Chemical and Jinan Acetate go up and down completely randomly.

Pair Corralation between Johnson Chemical and Jinan Acetate

Assuming the 90 days trading horizon Johnson Chemical is expected to generate 1.14 times less return on investment than Jinan Acetate. But when comparing it to its historical volatility, Johnson Chemical Pharmaceutical is 1.35 times less risky than Jinan Acetate. It trades about 0.05 of its potential returns per unit of risk. Jinan Acetate Chemical is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  90,700  in Jinan Acetate Chemical on December 22, 2024 and sell it today you would earn a total of  4,300  from holding Jinan Acetate Chemical or generate 4.74% return on investment over 90 days.

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

Johnson Chemical Pharmaceutica  vs.  Jinan Acetate Chemical

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.

Jinan Acetate Chemical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jinan Acetate Chemical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Jinan Acetate may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Johnson Chemical and Jinan Acetate

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

The idea behind Johnson Chemical Pharmaceutical and Jinan Acetate Chemical 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.