Correlation Between Johnson Johnson and COSCO SHIPPING

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Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and COSCO SHIPPING 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 Johnson and COSCO SHIPPING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and COSCO SHIPPING HOLDINGS, you can compare the effects of market volatilities on Johnson Johnson and COSCO SHIPPING 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 Johnson with a short position of COSCO SHIPPING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and COSCO SHIPPING.

Diversification Opportunities for Johnson Johnson and COSCO SHIPPING

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Johnson and COSCO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and COSCO SHIPPING HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING HOLDINGS and Johnson Johnson 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 Johnson are associated (or correlated) with COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING HOLDINGS has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and COSCO SHIPPING go up and down completely randomly.

Pair Corralation between Johnson Johnson and COSCO SHIPPING

If you would invest  16,300  in Johnson Johnson on June 30, 2022 and sell it today you would earn a total of  336.00  from holding Johnson Johnson or generate 2.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy4.55%
ValuesDaily Returns

Johnson Johnson  vs.  COSCO SHIPPING HOLDINGS

 Performance (%) 
       Timeline  
Johnson Johnson 
Johnson Performance
0 of 100
Over the last 90 days Johnson Johnson has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Johnson Johnson is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Johnson Price Channel

COSCO SHIPPING HOLDINGS 
COSCO Performance
0 of 100
Over the last 90 days COSCO SHIPPING HOLDINGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, COSCO SHIPPING is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Johnson Johnson and COSCO SHIPPING Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Johnson Johnson and COSCO SHIPPING

The main advantage of trading using opposite Johnson Johnson and COSCO SHIPPING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, COSCO SHIPPING 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 COSCO SHIPPING will offset losses from the drop in COSCO SHIPPING's long position.
Johnson Johnson vs. Amazon Inc
The idea behind Johnson Johnson and COSCO SHIPPING HOLDINGS 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.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against COSCO SHIPPING as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. COSCO SHIPPING's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, COSCO SHIPPING's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to COSCO SHIPPING HOLDINGS.
Check out your portfolio center. 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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