Correlation Between Data International and Johnson Chemical

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

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

Diversification Opportunities for Data International and Johnson Chemical

0.38

Correlation Coefficient

Data International  Johnson Chemical

Weak diversification

The 3 months correlation between Data and Johnson is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Data International Co 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 Data International 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 Data International Co 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 Data International i.e., Data International and Johnson Chemical go up and down completely randomly.

Pair Corralation between Data International and Johnson Chemical

Assuming the 90 days trading horizon Data International Co is expected to under-perform the Johnson Chemical. In addition to that, Data International is 2.83 times more volatile than Johnson Chemical Pharmaceutical. It trades about -0.18 of its total potential returns per unit of risk. Johnson Chemical Pharmaceutical is currently generating about -0.05 per unit of volatility. If you would invest  7,170  in Johnson Chemical Pharmaceutical on October 25, 2024 and sell it today you would lose (140.00) from holding Johnson Chemical Pharmaceutical or give up 1.95% of portfolio value over 90 days.

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

Data International Co  vs.  Johnson Chemical Pharmaceutica

Data International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Data International Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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.

Pair Trading with Data International and Johnson Chemical

The main advantage of trading using opposite Data International and Johnson Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Data International 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 Data International Co 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.