Correlation Between Johnson Johnson and Abcellera Biologics

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

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

Diversification Opportunities for Johnson Johnson and Abcellera Biologics

-0.48

Correlation Coefficient

Johnson Johnson  Abcellera Biologics

Very good diversification

The 3 months correlation between Johnson and Abcellera is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Abcellera Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abcellera Biologics 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 Abcellera Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abcellera Biologics has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Abcellera Biologics go up and down completely randomly.

Pair Corralation between Johnson Johnson and Abcellera Biologics

Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the Abcellera Biologics. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 2.33 times less risky than Abcellera Biologics. The stock trades about -0.14 of its potential returns per unit of risk. The Abcellera Biologics is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  223.00  in Abcellera Biologics on January 28, 2025 and sell it today you would earn a total of  33.00  from holding Abcellera Biologics or generate 14.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Johnson Johnson  vs.  Abcellera Biologics

Johnson Johnson

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Johnson are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, Johnson Johnson is not utilizing all of its potentials. The newest stock price chaos, may contribute to medium-term losses for the stakeholders.

Abcellera Biologics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Abcellera Biologics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in May 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Johnson Johnson and Abcellera Biologics

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

The idea behind Johnson Johnson and Abcellera Biologics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.