Correlation Between KPJ Healthcare and IHH Healthcare

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

Diversification Opportunities for KPJ Healthcare and IHH Healthcare

0.54

Correlation Coefficient

KPJ Healthcare  IHH Healthcare

Very weak diversification

The 3 months correlation between KPJ and IHH is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding KPJ Healthcare Bhd 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 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 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 KPJ Healthcare i.e., KPJ Healthcare and IHH Healthcare go up and down completely randomly.

Pair Corralation between KPJ Healthcare and IHH Healthcare

Assuming the 90 days trading horizon KPJ Healthcare Bhd is expected to generate 2.59 times more return on investment than IHH Healthcare. However, KPJ Healthcare is 2.59 times more volatile than IHH Healthcare Bhd. It trades about 0.01 of its potential returns per unit of risk. IHH Healthcare Bhd is currently generating about 0.02 per unit of risk. If you would invest  248.00  in KPJ Healthcare Bhd on November 29, 2024 and sell it today you would earn a total of  0.00  from holding KPJ Healthcare Bhd or generate 0.0% return on investment over 90 days.

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

KPJ Healthcare Bhd  vs.  IHH Healthcare Bhd

KPJ Healthcare Bhd

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with KPJ Healthcare and IHH Healthcare

The main advantage of trading using opposite KPJ Healthcare and IHH Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KPJ Healthcare 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 KPJ Healthcare Bhd 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.