Correlation Between Country Garden and Johnson Johnson
Can any of the company-specific risk be diversified away by investing in both Country Garden 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 Country Garden and Johnson Johnson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Country Garden Holdings and Johnson Johnson, you can compare the effects of market volatilities on Country Garden 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 Country Garden with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Country Garden and Johnson Johnson.
Diversification Opportunities for Country Garden and Johnson Johnson
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Country and Johnson is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Country Garden Holdings and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Country Garden 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 Country Garden Holdings 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 Country Garden i.e., Country Garden and Johnson Johnson go up and down completely randomly.
Pair Corralation between Country Garden and Johnson Johnson
Assuming the 90 days horizon Country Garden Holdings is expected to generate 11.91 times more return on investment than Johnson Johnson. However, Country Garden is 11.91 times more volatile than Johnson Johnson. It trades about 0.0 of its potential returns per unit of risk. Johnson Johnson is currently generating about -0.02 per unit of risk. If you would invest 59.00 in Country Garden Holdings on January 26, 2024 and sell it today you would lose (51.00) from holding Country Garden Holdings or give up 86.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Country Garden Holdings vs. Johnson Johnson
Performance |
| Timeline |
| Country Garden Holdings |
| Johnson Johnson |
Country Garden and Johnson Johnson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Country Garden and Johnson Johnson
The main advantage of trading using opposite Country Garden and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Country Garden 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.| Country Garden vs. California Water Service | Country Garden vs. Kinetik Holdings | Country Garden vs. NRG Energy | Country Garden vs. PACCAR Inc |
| Johnson Johnson vs. Merck Company | Johnson Johnson vs. Bristol Myers Squibb | Johnson Johnson vs. Amgen Inc | Johnson Johnson vs. Pfizer Inc |
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 the Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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