Correlation Between Johnson Johnson and Pingtan Marine

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

By analyzing existing cross correlation between Johnson Johnson and Pingtan Marine Enterprise, you can compare the effects of market volatilities on Johnson Johnson and Pingtan Marine 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 Pingtan Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Pingtan Marine.

Diversification Opportunities for Johnson Johnson and Pingtan Marine

0.61

Correlation Coefficient

Johnson Johnson  Pingtan Marine

Poor diversification

The 3 months correlation between Johnson and Pingtan is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Pingtan Marine Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pingtan Marine Enterprise 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 Pingtan Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pingtan Marine Enterprise has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Pingtan Marine go up and down completely randomly.

Pair Corralation between Johnson Johnson and Pingtan Marine

If you would invest  14,370  in Johnson Johnson on September 15, 2024 and sell it today you would earn a total of  292.00  from holding Johnson Johnson or generate 2.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.79%
Values	Daily Returns

Johnson Johnson  vs.  Pingtan Marine Enterprise

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 uncertain 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.

Pingtan Marine Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pingtan Marine Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Pingtan Marine is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Johnson Johnson and Pingtan Marine

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

The idea behind Johnson Johnson and Pingtan Marine Enterprise 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.