Correlation Between Johnson Matthey and Nano One

Can any of the company-specific risk be diversified away by investing in both Johnson Matthey and Nano One 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 Nano One 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 Nano One Materials, you can compare the effects of market volatilities on Johnson Matthey and Nano One 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 Nano One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Matthey and Nano One.

Diversification Opportunities for Johnson Matthey and Nano One

0.17

Correlation Coefficient

Johnson Matthey  Nano One

Average diversification

The 3 months correlation between Johnson and Nano is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Matthey PLC and Nano One Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano One Materials 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 Nano One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano One Materials has no effect on the direction of Johnson Matthey i.e., Johnson Matthey and Nano One go up and down completely randomly.

Pair Corralation between Johnson Matthey and Nano One

Assuming the 90 days horizon Johnson Matthey PLC is expected to under-perform the Nano One. But the pink sheet apears to be less risky and, when comparing its historical volatility, Johnson Matthey PLC is 2.74 times less risky than Nano One. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Nano One Materials is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  52.00  in Nano One Materials on September 13, 2024 and sell it today you would earn a total of  18.00  from holding Nano One Materials or generate 34.62% return on investment over 90 days.

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

Johnson Matthey PLC  vs.  Nano One Materials

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. In spite of unsteady performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nano One Materials

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nano One Materials are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Nano One reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Johnson Matthey and Nano One

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

The idea behind Johnson Matthey PLC and Nano One Materials 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 Commodity Directory module to find actively traded commodities issued by global exchanges.