Correlation Between PLAY2CHILL and Johnson Matthey

Can any of the company-specific risk be diversified away by investing in both PLAY2CHILL and Johnson Matthey 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 PLAY2CHILL and Johnson Matthey into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PLAY2CHILL SA ZY and Johnson Matthey Plc, you can compare the effects of market volatilities on PLAY2CHILL and Johnson Matthey 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 PLAY2CHILL with a short position of Johnson Matthey. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAY2CHILL and Johnson Matthey.

Diversification Opportunities for PLAY2CHILL and Johnson Matthey

-0.19

Correlation Coefficient

PLAY2CHILL  Johnson Matthey

Good diversification

The 3 months correlation between PLAY2CHILL and Johnson is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding PLAY2CHILL SA ZY and Johnson Matthey Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Matthey Plc and PLAY2CHILL 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 PLAY2CHILL SA ZY are associated (or correlated) with Johnson Matthey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Matthey Plc has no effect on the direction of PLAY2CHILL i.e., PLAY2CHILL and Johnson Matthey go up and down completely randomly.

Pair Corralation between PLAY2CHILL and Johnson Matthey

Assuming the 90 days horizon PLAY2CHILL SA ZY is expected to under-perform the Johnson Matthey. In addition to that, PLAY2CHILL is 1.07 times more volatile than Johnson Matthey Plc. It trades about -0.34 of its total potential returns per unit of risk. Johnson Matthey Plc is currently generating about -0.14 per unit of volatility. If you would invest  1,681  in Johnson Matthey Plc on October 9, 2024 and sell it today you would lose (68.00) from holding Johnson Matthey Plc or give up 4.05% of portfolio value over 90 days.

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

PLAY2CHILL SA ZY  vs.  Johnson Matthey Plc

PLAY2CHILL SA ZY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLAY2CHILL SA ZY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PLAY2CHILL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Johnson Matthey Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Johnson Matthey Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with PLAY2CHILL and Johnson Matthey

The main advantage of trading using opposite PLAY2CHILL and Johnson Matthey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAY2CHILL position performs unexpectedly, Johnson Matthey 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 Matthey will offset losses from the drop in Johnson Matthey's long position.

The idea behind PLAY2CHILL SA ZY and Johnson Matthey Plc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.