Correlation Between Keck Seng and Johnson Johnson
Can any of the company-specific risk be diversified away by investing in both Keck Seng 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 Keck Seng and Johnson Johnson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keck Seng Investments and Johnson Johnson, you can compare the effects of market volatilities on Keck Seng 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 Keck Seng with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keck Seng and Johnson Johnson.
Diversification Opportunities for Keck Seng and Johnson Johnson
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Keck and Johnson is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Keck Seng Investments and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Keck Seng 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 Keck Seng Investments 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 Keck Seng i.e., Keck Seng and Johnson Johnson go up and down completely randomly.
Pair Corralation between Keck Seng and Johnson Johnson
Assuming the 90 days horizon Keck Seng Investments is expected to generate 5.4 times more return on investment than Johnson Johnson. However, Keck Seng is 5.4 times more volatile than Johnson Johnson. It trades about 0.27 of its potential returns per unit of risk. Johnson Johnson is currently generating about -0.22 per unit of risk. If you would invest 25.00 in Keck Seng Investments on January 26, 2024 and sell it today you would earn a total of 8.00 from holding Keck Seng Investments or generate 32.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keck Seng Investments vs. Johnson Johnson
Performance |
| Timeline |
| Keck Seng Investments |
| Johnson Johnson |
Keck Seng and Johnson Johnson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keck Seng and Johnson Johnson
The main advantage of trading using opposite Keck Seng and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keck Seng 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.| Keck Seng vs. Marriott International | Keck Seng vs. Hilton Worldwide Holdings | Keck Seng vs. InterContinental Hotels Group | Keck Seng vs. Choice Hotels International |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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