Correlation Between JOHNSON SVC and LABOCANNA

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

By analyzing existing cross correlation between JOHNSON SVC LS 10 and LABOCANNA SA ZY 10, you can compare the effects of market volatilities on JOHNSON SVC and LABOCANNA 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 SVC with a short position of LABOCANNA. Check out your portfolio center. Please also check ongoing floating volatility patterns of JOHNSON SVC and LABOCANNA.

Diversification Opportunities for JOHNSON SVC and LABOCANNA

0.63

Correlation Coefficient

JOHNSON SVC  LABOCANNA

Poor diversification

The 3 months correlation between JOHNSON and LABOCANNA is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding JOHNSON SVC LS 10 and LABOCANNA SA ZY 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LABOCANNA SA ZY and JOHNSON SVC 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 SVC LS 10 are associated (or correlated) with LABOCANNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LABOCANNA SA ZY has no effect on the direction of JOHNSON SVC i.e., JOHNSON SVC and LABOCANNA go up and down completely randomly.

Pair Corralation between JOHNSON SVC and LABOCANNA

Assuming the 90 days horizon JOHNSON SVC LS 10 is expected to generate 1.29 times more return on investment than LABOCANNA. However, JOHNSON SVC is 1.29 times more volatile than LABOCANNA SA ZY 10. It trades about -0.07 of its potential returns per unit of risk. LABOCANNA SA ZY 10 is currently generating about -0.1 per unit of risk. If you would invest  188.00  in JOHNSON SVC LS 10 on September 23, 2024 and sell it today you would lose (29.00) from holding JOHNSON SVC LS 10 or give up 15.43% of portfolio value over 90 days.

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

JOHNSON SVC LS 10  vs.  LABOCANNA SA ZY 10

JOHNSON SVC LS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JOHNSON SVC LS 10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

LABOCANNA SA ZY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LABOCANNA SA ZY 10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with JOHNSON SVC and LABOCANNA

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

The idea behind JOHNSON SVC LS 10 and LABOCANNA SA ZY 10 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.