Correlation Between Nova Wellness and Kumpulan Kitacon

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

By analyzing existing cross correlation between Nova Wellness Group and Kumpulan Kitacon Berhad, you can compare the effects of market volatilities on Nova Wellness and Kumpulan Kitacon 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 Nova Wellness with a short position of Kumpulan Kitacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Wellness and Kumpulan Kitacon.

Diversification Opportunities for Nova Wellness and Kumpulan Kitacon

-0.2

Correlation Coefficient

Nova Wellness  Kumpulan Kitacon

Good diversification

The 3 months correlation between Nova and Kumpulan is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nova Wellness Group and Kumpulan Kitacon Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumpulan Kitacon Berhad and Nova Wellness 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 Nova Wellness Group are associated (or correlated) with Kumpulan Kitacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumpulan Kitacon Berhad has no effect on the direction of Nova Wellness i.e., Nova Wellness and Kumpulan Kitacon go up and down completely randomly.

Pair Corralation between Nova Wellness and Kumpulan Kitacon

Assuming the 90 days trading horizon Nova Wellness Group is expected to under-perform the Kumpulan Kitacon. In addition to that, Nova Wellness is 1.52 times more volatile than Kumpulan Kitacon Berhad. It trades about -0.07 of its total potential returns per unit of risk. Kumpulan Kitacon Berhad is currently generating about -0.01 per unit of volatility. If you would invest  73.00  in Kumpulan Kitacon Berhad on October 26, 2024 and sell it today you would lose (1.00) from holding Kumpulan Kitacon Berhad or give up 1.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Nova Wellness Group  vs.  Kumpulan Kitacon Berhad

Nova Wellness Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nova Wellness Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Kumpulan Kitacon Berhad

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kumpulan Kitacon Berhad has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Kumpulan Kitacon is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Nova Wellness and Kumpulan Kitacon

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

The idea behind Nova Wellness Group and Kumpulan Kitacon Berhad 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.