Correlation Between KPJ Healthcare and CSC Steel

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

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

Diversification Opportunities for KPJ Healthcare and CSC Steel

-0.43

Correlation Coefficient

KPJ Healthcare  CSC Steel

Very good diversification

The 3 months correlation between KPJ and CSC is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding KPJ Healthcare Bhd and CSC Steel Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSC Steel Holdings and KPJ 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 KPJ Healthcare Bhd are associated (or correlated) with CSC Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSC Steel Holdings has no effect on the direction of KPJ Healthcare i.e., KPJ Healthcare and CSC Steel go up and down completely randomly.

Pair Corralation between KPJ Healthcare and CSC Steel

Assuming the 90 days trading horizon KPJ Healthcare Bhd is expected to under-perform the CSC Steel. In addition to that, KPJ Healthcare is 1.64 times more volatile than CSC Steel Holdings. It trades about -0.16 of its total potential returns per unit of risk. CSC Steel Holdings is currently generating about -0.09 per unit of volatility. If you would invest  116.00  in CSC Steel Holdings on October 24, 2024 and sell it today you would lose (2.00) from holding CSC Steel Holdings or give up 1.72% of portfolio value over 90 days.

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

KPJ Healthcare Bhd  vs.  CSC Steel Holdings

KPJ Healthcare Bhd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KPJ Healthcare Bhd are ranked lower than 4 (%) 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 February 2025.

CSC Steel Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSC Steel Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, CSC Steel 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 KPJ Healthcare and CSC Steel

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

The idea behind KPJ Healthcare Bhd and CSC Steel Holdings 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 Stocks Directory module to find actively traded stocks across global markets.