Correlation Between Seraphim Space and Johnson Matthey

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

By analyzing existing cross correlation between Seraphim Space Investment and Johnson Matthey PLC, you can compare the effects of market volatilities on Seraphim Space and Johnson Matthey 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 Seraphim Space with a short position of Johnson Matthey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seraphim Space and Johnson Matthey.

Diversification Opportunities for Seraphim Space and Johnson Matthey

0.96

Correlation Coefficient

Seraphim Space  Johnson Matthey

Almost no diversification

The 3 months correlation between Seraphim and Johnson is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Seraphim Space Investment and Johnson Matthey PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Matthey PLC and Seraphim Space 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 Seraphim Space Investment are associated (or correlated) with Johnson Matthey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Matthey PLC has no effect on the direction of Seraphim Space i.e., Seraphim Space and Johnson Matthey go up and down completely randomly.

Pair Corralation between Seraphim Space and Johnson Matthey

Assuming the 90 days trading horizon Seraphim Space Investment is expected to generate 0.68 times more return on investment than Johnson Matthey. However, Seraphim Space Investment is 1.47 times less risky than Johnson Matthey. It trades about 0.34 of its potential returns per unit of risk. Johnson Matthey PLC is currently generating about 0.21 per unit of risk. If you would invest  4,800  in Seraphim Space Investment on April 6, 2025 and sell it today you would earn a total of  3,560  from holding Seraphim Space Investment or generate 74.17% return on investment over 90 days.

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

Seraphim Space Investment  vs.  Johnson Matthey PLC

Seraphim Space Investment

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Seraphim Space Investment are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Seraphim Space unveiled solid returns over the last few months and may actually be approaching a breakup point.

Johnson Matthey PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Matthey PLC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Johnson Matthey unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Seraphim Space and Johnson Matthey

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

The idea behind Seraphim Space Investment and Johnson Matthey PLC 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.