Correlation Between Chalice Mining and Johnson Johnson

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

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

Diversification Opportunities for Chalice Mining and Johnson Johnson

0.76

Correlation Coefficient

Chalice Mining  Johnson Johnson

Poor diversification

The 3 months correlation between Chalice and Johnson is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Chalice Mining Limited and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Chalice Mining 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 Chalice Mining Limited are associated (or correlated) with Johnson Johnson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Johnson has no effect on the direction of Chalice Mining i.e., Chalice Mining and Johnson Johnson go up and down completely randomly.

Pair Corralation between Chalice Mining and Johnson Johnson

Assuming the 90 days horizon Chalice Mining Limited is expected to under-perform the Johnson Johnson. In addition to that, Chalice Mining is 5.4 times more volatile than Johnson Johnson. It trades about -0.04 of its total potential returns per unit of risk. Johnson Johnson is currently generating about 0.0 per unit of volatility. If you would invest  14,426  in Johnson Johnson on October 22, 2024 and sell it today you would lose (112.00) from holding Johnson Johnson or give up 0.78% of portfolio value over 90 days.

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

Chalice Mining Limited  vs.  Johnson Johnson

Chalice Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chalice Mining Limited 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Johnson Johnson

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Chalice Mining and Johnson Johnson

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

The idea behind Chalice Mining Limited and Johnson Johnson 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.