Correlation Between KPJ Healthcare and MI Technovation

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

Diversification Opportunities for KPJ Healthcare and MI Technovation

-0.82

Correlation Coefficient

KPJ Healthcare  MI Technovation

Pay attention - limited upside

The 3 months correlation between KPJ and 5286 is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding KPJ Healthcare Bhd and MI Technovation Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MI Technovation 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 MI Technovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MI Technovation Bhd has no effect on the direction of KPJ Healthcare i.e., KPJ Healthcare and MI Technovation go up and down completely randomly.

Pair Corralation between KPJ Healthcare and MI Technovation

Assuming the 90 days trading horizon KPJ Healthcare Bhd is expected to generate 1.1 times more return on investment than MI Technovation. However, KPJ Healthcare is 1.1 times more volatile than MI Technovation Bhd. It trades about 0.08 of its potential returns per unit of risk. MI Technovation Bhd is currently generating about -0.15 per unit of risk. If you would invest  236.00  in KPJ Healthcare Bhd on December 22, 2024 and sell it today you would earn a total of  24.00  from holding KPJ Healthcare Bhd or generate 10.17% return on investment over 90 days.

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

KPJ Healthcare Bhd  vs.  MI Technovation Bhd

KPJ Healthcare Bhd

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KPJ Healthcare Bhd are ranked lower than 6 (%) 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 April 2025.

MI Technovation Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days MI Technovation Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with KPJ Healthcare and MI Technovation

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

The idea behind KPJ Healthcare Bhd and MI Technovation 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.