Correlation Between CTCI Corp and Johnson Health

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

By analyzing existing cross correlation between CTCI Corp and Johnson Health Tech, you can compare the effects of market volatilities on CTCI Corp and Johnson Health 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 CTCI Corp with a short position of Johnson Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTCI Corp and Johnson Health.

Diversification Opportunities for CTCI Corp and Johnson Health

-0.61

Correlation Coefficient

CTCI Corp  Johnson Health

Excellent diversification

The 3 months correlation between CTCI and Johnson is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding CTCI Corp and Johnson Health Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Health Tech and CTCI Corp 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 CTCI Corp are associated (or correlated) with Johnson Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Health Tech has no effect on the direction of CTCI Corp i.e., CTCI Corp and Johnson Health go up and down completely randomly.

Pair Corralation between CTCI Corp and Johnson Health

Assuming the 90 days trading horizon CTCI Corp is expected to under-perform the Johnson Health. But the stock apears to be less risky and, when comparing its historical volatility, CTCI Corp is 3.25 times less risky than Johnson Health. The stock trades about -0.08 of its potential returns per unit of risk. The Johnson Health Tech is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  19,000  in Johnson Health Tech on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Johnson Health Tech or generate 0.0% return on investment over 90 days.

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

CTCI Corp  vs.  Johnson Health Tech

CTCI Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTCI Corp 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 Health Tech

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Health Tech are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Johnson Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CTCI Corp and Johnson Health

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

The idea behind CTCI Corp and Johnson Health Tech 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.