Correlation Between Johnson Johnson and AirNet Technology

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

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

Diversification Opportunities for Johnson Johnson and AirNet Technology

0.0

Correlation Coefficient

Johnson Johnson  AirNet Technology

Pay attention - limited upside

The 3 months correlation between Johnson and AirNet is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and AirNet Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AirNet Technology 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 AirNet Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AirNet Technology has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and AirNet Technology go up and down completely randomly.

Pair Corralation between Johnson Johnson and AirNet Technology

If you would invest (100.00) in AirNet Technology on February 7, 2024 and sell it today you would earn a total of  100.00  from holding AirNet Technology or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Johnson Johnson  vs.  AirNet Technology

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 relatively steady basic indicators, Johnson Johnson is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

AirNet Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Johnson Johnson and AirNet Technology

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

The idea behind Johnson Johnson and AirNet Technology 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.