Correlation Between JOHNSON SVC and PARK24

Can any of the company-specific risk be diversified away by investing in both JOHNSON SVC and PARK24 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 SVC and PARK24 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JOHNSON SVC LS 10 and PARK24 LTD, you can compare the effects of market volatilities on JOHNSON SVC and PARK24 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 SVC with a short position of PARK24. Check out your portfolio center. Please also check ongoing floating volatility patterns of JOHNSON SVC and PARK24.

Diversification Opportunities for JOHNSON SVC and PARK24

-0.8

Correlation Coefficient

JOHNSON SVC  PARK24

Pay attention - limited upside

The 3 months correlation between JOHNSON and PARK24 is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding JOHNSON SVC LS 10 and PARK24 LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARK24 LTD and JOHNSON SVC 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 SVC LS 10 are associated (or correlated) with PARK24. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARK24 LTD has no effect on the direction of JOHNSON SVC i.e., JOHNSON SVC and PARK24 go up and down completely randomly.

Pair Corralation between JOHNSON SVC and PARK24

Assuming the 90 days horizon JOHNSON SVC LS 10 is expected to under-perform the PARK24. But the stock apears to be less risky and, when comparing its historical volatility, JOHNSON SVC LS 10 is 1.04 times less risky than PARK24. The stock trades about -0.04 of its potential returns per unit of risk. The PARK24 LTD is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  1,090  in PARK24 LTD on September 23, 2024 and sell it today you would earn a total of  250.00  from holding PARK24 LTD or generate 22.94% return on investment over 90 days.

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

JOHNSON SVC LS 10  vs.  PARK24 LTD

JOHNSON SVC LS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JOHNSON SVC LS 10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

PARK24 LTD

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PARK24 LTD are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PARK24 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JOHNSON SVC and PARK24

The main advantage of trading using opposite JOHNSON SVC and PARK24 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JOHNSON SVC position performs unexpectedly, PARK24 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 PARK24 will offset losses from the drop in PARK24's long position.

The idea behind JOHNSON SVC LS 10 and PARK24 LTD 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.