Correlation Between IHH Healthcare and Senheng New

Can any of the company-specific risk be diversified away by investing in both IHH Healthcare and Senheng New 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 Senheng New 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 Senheng New Retail, you can compare the effects of market volatilities on IHH Healthcare and Senheng New 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 Senheng New. Check out your portfolio center. Please also check ongoing floating volatility patterns of IHH Healthcare and Senheng New.

Diversification Opportunities for IHH Healthcare and Senheng New

-0.4

Correlation Coefficient

IHH Healthcare  Senheng New

Very good diversification

The 3 months correlation between IHH and Senheng is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding IHH Healthcare Bhd and Senheng New Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senheng New Retail 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 Senheng New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senheng New Retail has no effect on the direction of IHH Healthcare i.e., IHH Healthcare and Senheng New go up and down completely randomly.

Pair Corralation between IHH Healthcare and Senheng New

Assuming the 90 days trading horizon IHH Healthcare Bhd is expected to under-perform the Senheng New. But the stock apears to be less risky and, when comparing its historical volatility, IHH Healthcare Bhd is 2.51 times less risky than Senheng New. The stock trades about -0.02 of its potential returns per unit of risk. The Senheng New Retail is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Senheng New Retail on September 28, 2024 and sell it today you would earn a total of  3.00  from holding Senheng New Retail or generate 12.5% return on investment over 90 days.

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

IHH Healthcare Bhd  vs.  Senheng New Retail

IHH Healthcare Bhd

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IHH Healthcare Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Senheng New Retail

Risk-Adjusted Performance

3 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Senheng New Retail are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Senheng New 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 Senheng New

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

The idea behind IHH Healthcare Bhd and Senheng New Retail 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.