Correlation Between IHH Healthcare and CTOS Digital

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

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

Diversification Opportunities for IHH Healthcare and CTOS Digital

0.05

Correlation Coefficient

IHH Healthcare  CTOS Digital

Significant diversification

The 3 months correlation between IHH and CTOS is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding IHH Healthcare Bhd and CTOS Digital Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTOS Digital Bhd and IHH 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 IHH Healthcare Bhd are associated (or correlated) with CTOS Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTOS Digital Bhd has no effect on the direction of IHH Healthcare i.e., IHH Healthcare and CTOS Digital go up and down completely randomly.

Pair Corralation between IHH Healthcare and CTOS Digital

Assuming the 90 days trading horizon IHH Healthcare Bhd is expected to generate 0.67 times more return on investment than CTOS Digital. However, IHH Healthcare Bhd is 1.49 times less risky than CTOS Digital. It trades about -0.06 of its potential returns per unit of risk. CTOS Digital Bhd is currently generating about -0.05 per unit of risk. If you would invest  717.00  in IHH Healthcare Bhd on December 30, 2024 and sell it today you would lose (25.00) from holding IHH Healthcare Bhd or give up 3.49% of portfolio value over 90 days.

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

IHH Healthcare Bhd  vs.  CTOS Digital Bhd

IHH Healthcare Bhd

Risk-Adjusted Performance

Very Weak

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

CTOS Digital Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days CTOS Digital Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, CTOS Digital 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 IHH Healthcare and CTOS Digital

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

The idea behind IHH Healthcare Bhd and CTOS Digital 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.