Correlation Between Johnson Matthey and TOR Minerals

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

By analyzing existing cross correlation between Johnson Matthey Plc and TOR Minerals International, you can compare the effects of market volatilities on Johnson Matthey and TOR Minerals 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 Matthey with a short position of TOR Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Matthey and TOR Minerals.

Diversification Opportunities for Johnson Matthey and TOR Minerals

-0.63

Correlation Coefficient

Johnson Matthey  TOR Minerals

Excellent diversification

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

Pair Corralation between Johnson Matthey and TOR Minerals

If you would invest  270.00  in TOR Minerals International on September 13, 2024 and sell it today you would earn a total of  0.00  from holding TOR Minerals International or generate 0.0% return on investment over 90 days.

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

Johnson Matthey Plc  vs.  TOR Minerals International

Johnson Matthey Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Johnson Matthey Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Johnson Matthey is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

TOR Minerals Interna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOR Minerals International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, TOR Minerals is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Johnson Matthey and TOR Minerals

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

The idea behind Johnson Matthey Plc and TOR Minerals International 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.