Correlation Between Ho Hup and KPJ Healthcare

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

By analyzing existing cross correlation between Ho Hup Construction and KPJ Healthcare Bhd, you can compare the effects of market volatilities on Ho Hup and KPJ Healthcare 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 Ho Hup with a short position of KPJ Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ho Hup and KPJ Healthcare.

Diversification Opportunities for Ho Hup and KPJ Healthcare

-0.24

Correlation Coefficient

Ho Hup  KPJ Healthcare

Very good diversification

The 3 months correlation between 5169 and KPJ is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ho Hup Construction and KPJ Healthcare Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPJ Healthcare Bhd and Ho Hup 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 Ho Hup Construction are associated (or correlated) with KPJ Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPJ Healthcare Bhd has no effect on the direction of Ho Hup i.e., Ho Hup and KPJ Healthcare go up and down completely randomly.

Pair Corralation between Ho Hup and KPJ Healthcare

Assuming the 90 days trading horizon Ho Hup Construction is expected to generate 2.51 times more return on investment than KPJ Healthcare. However, Ho Hup is 2.51 times more volatile than KPJ Healthcare Bhd. It trades about 0.12 of its potential returns per unit of risk. KPJ Healthcare Bhd is currently generating about 0.07 per unit of risk. If you would invest  14.00  in Ho Hup Construction on December 30, 2024 and sell it today you would earn a total of  6.00  from holding Ho Hup Construction or generate 42.86% return on investment over 90 days.

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

Ho Hup Construction  vs.  KPJ Healthcare Bhd

Ho Hup Construction

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ho Hup Construction are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Ho Hup disclosed solid returns over the last few months and may actually be approaching a breakup point.

KPJ Healthcare Bhd

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KPJ Healthcare Bhd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, KPJ Healthcare may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ho Hup and KPJ Healthcare

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

The idea behind Ho Hup Construction and KPJ Healthcare Bhd 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.