Correlation Between KPJ Healthcare and Impiana Hotels

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

Diversification Opportunities for KPJ Healthcare and Impiana Hotels

-0.51

Correlation Coefficient

KPJ Healthcare  Impiana Hotels

Excellent diversification

The 3 months correlation between KPJ and Impiana is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding KPJ Healthcare Bhd and Impiana Hotels Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impiana Hotels 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 Impiana Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impiana Hotels Bhd has no effect on the direction of KPJ Healthcare i.e., KPJ Healthcare and Impiana Hotels go up and down completely randomly.

Pair Corralation between KPJ Healthcare and Impiana Hotels

Assuming the 90 days trading horizon KPJ Healthcare Bhd is expected to under-perform the Impiana Hotels. But the stock apears to be less risky and, when comparing its historical volatility, KPJ Healthcare Bhd is 1.23 times less risky than Impiana Hotels. The stock trades about -0.01 of its potential returns per unit of risk. The Impiana Hotels Bhd is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Impiana Hotels Bhd on December 1, 2024 and sell it today you would earn a total of  0.00  from holding Impiana Hotels Bhd or generate 0.0% return on investment over 90 days.

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

KPJ Healthcare Bhd  vs.  Impiana Hotels 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.

Impiana Hotels Bhd

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Impiana Hotels Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Impiana Hotels 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 Impiana Hotels

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

The idea behind KPJ Healthcare Bhd and Impiana Hotels 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.