Correlation Between DC HEALTHCARE and Top Glove

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

By analyzing existing cross correlation between DC HEALTHCARE HOLDINGS and Top Glove, you can compare the effects of market volatilities on DC HEALTHCARE and Top Glove 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 DC HEALTHCARE with a short position of Top Glove. Check out your portfolio center. Please also check ongoing floating volatility patterns of DC HEALTHCARE and Top Glove.

Diversification Opportunities for DC HEALTHCARE and Top Glove

-0.22

Correlation Coefficient

DC HEALTHCARE  Top Glove

Very good diversification

The 3 months correlation between 0283 and Top is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding DC HEALTHCARE HOLDINGS and Top Glove in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Glove and DC HEALTHCARE 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 DC HEALTHCARE HOLDINGS are associated (or correlated) with Top Glove. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Glove has no effect on the direction of DC HEALTHCARE i.e., DC HEALTHCARE and Top Glove go up and down completely randomly.

Pair Corralation between DC HEALTHCARE and Top Glove

Assuming the 90 days trading horizon DC HEALTHCARE HOLDINGS is expected to under-perform the Top Glove. But the stock apears to be less risky and, when comparing its historical volatility, DC HEALTHCARE HOLDINGS is 1.23 times less risky than Top Glove. The stock trades about -0.04 of its potential returns per unit of risk. The Top Glove is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  97.00  in Top Glove on September 5, 2024 and sell it today you would earn a total of  20.00  from holding Top Glove or generate 20.62% return on investment over 90 days.

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

DC HEALTHCARE HOLDINGS  vs.  Top Glove

DC HEALTHCARE HOLDINGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DC HEALTHCARE HOLDINGS 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.

Top Glove

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Top Glove are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Top Glove disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DC HEALTHCARE and Top Glove

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

The idea behind DC HEALTHCARE HOLDINGS and Top Glove 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.