Correlation Between Otsuka Holdings and Johnson Johnson

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

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

Diversification Opportunities for Otsuka Holdings and Johnson Johnson

0.17

Correlation Coefficient

Otsuka Holdings  Johnson Johnson

Average diversification

The 3 months correlation between Otsuka and Johnson is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Otsuka Holdings Co and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Otsuka Holdings 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 Otsuka Holdings Co 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 Otsuka Holdings i.e., Otsuka Holdings and Johnson Johnson go up and down completely randomly.

Pair Corralation between Otsuka Holdings and Johnson Johnson

If you would invest  3,948  in Otsuka Holdings Co on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Otsuka Holdings Co or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

Otsuka Holdings Co  vs.  Johnson Johnson

Otsuka Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Otsuka Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Otsuka Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the 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. Even with latest uncertain performance, the Stock's basic indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Pair Trading with Otsuka Holdings and Johnson Johnson

The main advantage of trading using opposite Otsuka Holdings and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otsuka Holdings 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 Otsuka Holdings Co 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.