Correlation Between Johnson Controls and ANGANG STEEL

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

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

Diversification Opportunities for Johnson Controls and ANGANG STEEL

-0.33

Correlation Coefficient

Johnson Controls  ANGANG STEEL

Very good diversification

The 3 months correlation between Johnson and ANGANG is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Controls International and ANGANG STEEL H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANGANG STEEL H and Johnson Controls 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 Johnson Controls International are associated (or correlated) with ANGANG STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANGANG STEEL H has no effect on the direction of Johnson Controls i.e., Johnson Controls and ANGANG STEEL go up and down completely randomly.

Pair Corralation between Johnson Controls and ANGANG STEEL

Assuming the 90 days trading horizon Johnson Controls is expected to generate 17.94 times less return on investment than ANGANG STEEL. But when comparing it to its historical volatility, Johnson Controls International is 1.49 times less risky than ANGANG STEEL. It trades about 0.01 of its potential returns per unit of risk. ANGANG STEEL H is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  18.00  in ANGANG STEEL H on December 23, 2024 and sell it today you would earn a total of  4.00  from holding ANGANG STEEL H or generate 22.22% return on investment over 90 days.

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

Johnson Controls International  vs.  ANGANG STEEL H

Johnson Controls Int

Risk-Adjusted Performance

Very Weak

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

ANGANG STEEL H

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ANGANG STEEL H are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ANGANG STEEL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Johnson Controls and ANGANG STEEL

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

The idea behind Johnson Controls International and ANGANG STEEL H 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.