Correlation Between Johnson Johnson and Apyx Medical

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

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

Diversification Opportunities for Johnson Johnson and Apyx Medical

-0.45

Correlation Coefficient

Johnson Johnson  Apyx Medical

Very good diversification

The 3 months correlation between Johnson and Apyx is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Apyx Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apyx Medical 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 Apyx Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apyx Medical has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Apyx Medical go up and down completely randomly.

Pair Corralation between Johnson Johnson and Apyx Medical

Considering the 90-day investment horizon Johnson Johnson is expected to generate 0.14 times more return on investment than Apyx Medical. However, Johnson Johnson is 7.03 times less risky than Apyx Medical. It trades about -0.09 of its potential returns per unit of risk. Apyx Medical is currently generating about -0.07 per unit of risk. If you would invest  16,392  in Johnson Johnson on June 29, 2024 and sell it today you would lose (252.00) from holding Johnson Johnson or give up 1.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Johnson Johnson  vs.  Apyx Medical

Johnson Johnson

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Johnson are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Johnson Johnson may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Apyx Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apyx Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Apyx Medical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Johnson Johnson and Apyx Medical

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

The idea behind Johnson Johnson and Apyx Medical 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.