Correlation Between MeVis Medical and Johnson Matthey

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

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

Diversification Opportunities for MeVis Medical and Johnson Matthey

0.19

Correlation Coefficient

MeVis Medical  Johnson Matthey

Average diversification

The 3 months correlation between MeVis and Johnson is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding MeVis Medical Solutions 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 MeVis Medical 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 MeVis Medical Solutions 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 MeVis Medical i.e., MeVis Medical and Johnson Matthey go up and down completely randomly.

Pair Corralation between MeVis Medical and Johnson Matthey

Assuming the 90 days trading horizon MeVis Medical Solutions is expected to generate 0.78 times more return on investment than Johnson Matthey. However, MeVis Medical Solutions is 1.27 times less risky than Johnson Matthey. It trades about 0.11 of its potential returns per unit of risk. Johnson Matthey PLC is currently generating about 0.04 per unit of risk. If you would invest  2,400  in MeVis Medical Solutions on December 23, 2024 and sell it today you would earn a total of  180.00  from holding MeVis Medical Solutions or generate 7.5% return on investment over 90 days.

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

MeVis Medical Solutions  vs.  Johnson Matthey PLC

MeVis Medical Solutions

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MeVis Medical Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MeVis Medical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Johnson Matthey PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Matthey PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Johnson Matthey is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MeVis Medical and Johnson Matthey

The main advantage of trading using opposite MeVis Medical and Johnson Matthey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MeVis Medical 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 MeVis Medical Solutions 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.