Correlation Between Johnson Chemical and Acer E

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

Diversification Opportunities for Johnson Chemical and Acer E

-0.2

Correlation Coefficient

Johnson Chemical  Acer E

Good diversification

The 3 months correlation between Johnson and Acer is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Chemical Pharmaceutica and Acer E Enabling Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acer E Enabling 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 Acer E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acer E Enabling has no effect on the direction of Johnson Chemical i.e., Johnson Chemical and Acer E go up and down completely randomly.

Pair Corralation between Johnson Chemical and Acer E

Assuming the 90 days trading horizon Johnson Chemical is expected to generate 5.21 times less return on investment than Acer E. But when comparing it to its historical volatility, Johnson Chemical Pharmaceutical is 1.31 times less risky than Acer E. It trades about 0.01 of its potential returns per unit of risk. Acer E Enabling Service is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  25,100  in Acer E Enabling Service on October 23, 2024 and sell it today you would earn a total of  1,000.00  from holding Acer E Enabling Service or generate 3.98% 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.  Acer E Enabling Service

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.

Acer E Enabling

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Acer E Enabling Service are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Acer E 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 Acer E

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

The idea behind Johnson Chemical Pharmaceutical and Acer E Enabling Service 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.