Correlation Between CSPC Pharmaceutical and Johnson Johnson
Can any of the company-specific risk be diversified away by investing in both CSPC Pharmaceutical and Johnson Johnson 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 CSPC Pharmaceutical and Johnson Johnson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSPC Pharmaceutical Group and Johnson Johnson, you can compare the effects of market volatilities on CSPC Pharmaceutical and Johnson Johnson 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 CSPC Pharmaceutical with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSPC Pharmaceutical and Johnson Johnson.
Diversification Opportunities for CSPC Pharmaceutical and Johnson Johnson
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CSPC and Johnson is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CSPC Pharmaceutical Group and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and CSPC Pharmaceutical 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 CSPC Pharmaceutical Group are associated (or correlated) with Johnson Johnson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Johnson has no effect on the direction of CSPC Pharmaceutical i.e., CSPC Pharmaceutical and Johnson Johnson go up and down completely randomly.
Pair Corralation between CSPC Pharmaceutical and Johnson Johnson
Assuming the 90 days horizon CSPC Pharmaceutical Group is expected to generate 3.79 times more return on investment than Johnson Johnson. However, CSPC Pharmaceutical is 3.79 times more volatile than Johnson Johnson. It trades about 0.19 of its potential returns per unit of risk. Johnson Johnson is currently generating about 0.11 per unit of risk. If you would invest 64.00 in CSPC Pharmaceutical Group on May 5, 2025 and sell it today you would earn a total of 41.00 from holding CSPC Pharmaceutical Group or generate 64.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.41% |
Values | Daily Returns |
CSPC Pharmaceutical Group vs. Johnson Johnson
Performance |
Timeline |
CSPC Pharmaceutical |
Johnson Johnson |
CSPC Pharmaceutical and Johnson Johnson Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CSPC Pharmaceutical and Johnson Johnson
The main advantage of trading using opposite CSPC Pharmaceutical and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSPC Pharmaceutical position performs unexpectedly, Johnson Johnson 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 Johnson Johnson will offset losses from the drop in Johnson Johnson's long position.CSPC Pharmaceutical vs. Johnson Johnson | CSPC Pharmaceutical vs. Merck Company | CSPC Pharmaceutical vs. Bristol Myers Squibb | CSPC Pharmaceutical vs. Amgen Inc |
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Check out your portfolio center.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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