Correlation Between EA Technique and IHH Healthcare

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

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

Diversification Opportunities for EA Technique and IHH Healthcare

0.17

Correlation Coefficient

EA Technique  IHH Healthcare

Average diversification

The 3 months correlation between 5259 and IHH is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding EA Technique M and IHH Healthcare Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IHH Healthcare Bhd and EA Technique 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 EA Technique M are associated (or correlated) with IHH Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IHH Healthcare Bhd has no effect on the direction of EA Technique i.e., EA Technique and IHH Healthcare go up and down completely randomly.

Pair Corralation between EA Technique and IHH Healthcare

Assuming the 90 days trading horizon EA Technique is expected to generate 14.66 times less return on investment than IHH Healthcare. In addition to that, EA Technique is 1.57 times more volatile than IHH Healthcare Bhd. It trades about 0.01 of its total potential returns per unit of risk. IHH Healthcare Bhd is currently generating about 0.2 per unit of volatility. If you would invest  634.00  in IHH Healthcare Bhd on September 3, 2024 and sell it today you would earn a total of  92.00  from holding IHH Healthcare Bhd or generate 14.51% return on investment over 90 days.

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

EA Technique M  vs.  IHH Healthcare Bhd

EA Technique M

Risk-Adjusted Performance

0 of 100

Very Weak

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

IHH Healthcare Bhd

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IHH Healthcare Bhd are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, IHH Healthcare disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EA Technique and IHH Healthcare

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

The idea behind EA Technique M and IHH 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.