Correlation Between Johnson Johnson and Biophytis

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

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

Diversification Opportunities for Johnson Johnson and Biophytis

0.72

Correlation Coefficient

Johnson Johnson  Biophytis

Poor diversification

The 3 months correlation between Johnson and Biophytis is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Biophytis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biophytis and Johnson Johnson 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 Johnson are associated (or correlated) with Biophytis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biophytis has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Biophytis go up and down completely randomly.

Pair Corralation between Johnson Johnson and Biophytis

Considering the 90-day investment horizon Johnson Johnson is expected to generate 0.1 times more return on investment than Biophytis. However, Johnson Johnson is 9.62 times less risky than Biophytis. It trades about -0.02 of its potential returns per unit of risk. Biophytis is currently generating about -0.07 per unit of risk. If you would invest  16,075  in Johnson Johnson on September 12, 2024 and sell it today you would lose (1,152) from holding Johnson Johnson or give up 7.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	67.61%
Values	Daily Returns

Johnson Johnson  vs.  Biophytis

Johnson Johnson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Johnson Johnson has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Biophytis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biophytis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Biophytis is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Johnson Johnson and Biophytis

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

The idea behind Johnson Johnson and Biophytis 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.