Correlation Between Progate and Johnson Chemical

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

By analyzing existing cross correlation between Progate Group and Johnson Chemical Pharmaceutical, you can compare the effects of market volatilities on Progate and Johnson Chemical 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 Progate with a short position of Johnson Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Progate and Johnson Chemical.

Diversification Opportunities for Progate and Johnson Chemical

-0.26

Correlation Coefficient

Progate  Johnson Chemical

Very good diversification

The 3 months correlation between Progate and Johnson is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Progate Group and Johnson Chemical Pharmaceutica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Chemical Pha and Progate 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 Progate Group are associated (or correlated) with Johnson Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Chemical Pha has no effect on the direction of Progate i.e., Progate and Johnson Chemical go up and down completely randomly.

Pair Corralation between Progate and Johnson Chemical

Assuming the 90 days trading horizon Progate Group is expected to under-perform the Johnson Chemical. In addition to that, Progate is 1.46 times more volatile than Johnson Chemical Pharmaceutical. It trades about -0.02 of its total potential returns per unit of risk. Johnson Chemical Pharmaceutical is currently generating about 0.01 per unit of volatility. If you would invest  6,980  in Johnson Chemical Pharmaceutical on September 12, 2024 and sell it today you would earn a total of  30.00  from holding Johnson Chemical Pharmaceutical or generate 0.43% return on investment over 90 days.

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

Progate Group  vs.  Johnson Chemical Pharmaceutica

Progate Group

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Progate Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Progate is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Johnson Chemical Pha

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Johnson Chemical Pharmaceutical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Johnson Chemical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Progate and Johnson Chemical

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

The idea behind Progate Group and Johnson Chemical Pharmaceutical 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.