Correlation Between Nova Wellness and Public Bank
Can any of the company-specific risk be diversified away by investing in both Nova Wellness and Public Bank 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 Nova Wellness and Public Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Wellness Group and Public Bank Bhd, you can compare the effects of market volatilities on Nova Wellness and Public Bank 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 Nova Wellness with a short position of Public Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Wellness and Public Bank.
Diversification Opportunities for Nova Wellness and Public Bank
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nova and Public is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nova Wellness Group and Public Bank Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Bank Bhd and Nova Wellness 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 Nova Wellness Group are associated (or correlated) with Public Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Bank Bhd has no effect on the direction of Nova Wellness i.e., Nova Wellness and Public Bank go up and down completely randomly.
Pair Corralation between Nova Wellness and Public Bank
Assuming the 90 days trading horizon Nova Wellness Group is expected to under-perform the Public Bank. In addition to that, Nova Wellness is 2.1 times more volatile than Public Bank Bhd. It trades about -0.05 of its total potential returns per unit of risk. Public Bank Bhd is currently generating about 0.06 per unit of volatility. If you would invest 357.00 in Public Bank Bhd on August 31, 2024 and sell it today you would earn a total of 84.00 from holding Public Bank Bhd or generate 23.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.9% |
| Values | Daily Returns |
Nova Wellness Group vs. Public Bank Bhd
Performance |
| Timeline |
| Nova Wellness Group |
| Public Bank Bhd |
Nova Wellness and Public Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Wellness and Public Bank
The main advantage of trading using opposite Nova Wellness and Public Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Wellness position performs unexpectedly, Public Bank 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 Public Bank will offset losses from the drop in Public Bank's long position.| Nova Wellness vs. Nestle Bhd | Nova Wellness vs. FGV Holdings Bhd | Nova Wellness vs. British American Tobacco | Nova Wellness vs. FARM FRESH BERHAD |
| Public Bank vs. Nova Wellness Group | Public Bank vs. Dataprep Holdings Bhd | Public Bank vs. Impiana Hotels Bhd | Public Bank vs. Daya Materials Bhd |
Check out your portfolio center.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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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