Correlation Between Nova Wellness and PPB Group
Can any of the company-specific risk be diversified away by investing in both Nova Wellness and PPB Group 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 PPB Group 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 PPB Group Bhd, you can compare the effects of market volatilities on Nova Wellness and PPB Group 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 PPB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Wellness and PPB Group.
Diversification Opportunities for Nova Wellness and PPB Group
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nova and PPB is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nova Wellness Group and PPB Group Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPB Group 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 PPB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPB Group Bhd has no effect on the direction of Nova Wellness i.e., Nova Wellness and PPB Group go up and down completely randomly.
Pair Corralation between Nova Wellness and PPB Group
Assuming the 90 days trading horizon Nova Wellness Group is expected to generate 1.85 times more return on investment than PPB Group. However, Nova Wellness is 1.85 times more volatile than PPB Group Bhd. It trades about -0.08 of its potential returns per unit of risk. PPB Group Bhd is currently generating about -0.21 per unit of risk. If you would invest 44.00 in Nova Wellness Group on October 26, 2024 and sell it today you would lose (3.00) from holding Nova Wellness Group or give up 6.82% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 97.67% |
Values | Daily Returns |
Nova Wellness Group vs. PPB Group Bhd
Performance |
Timeline |
Nova Wellness Group |
PPB Group Bhd |
Nova Wellness and PPB Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nova Wellness and PPB Group
The main advantage of trading using opposite Nova Wellness and PPB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Wellness position performs unexpectedly, PPB Group 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 PPB Group will offset losses from the drop in PPB Group's long position.Nova Wellness vs. Choo Bee Metal | Nova Wellness vs. KPJ Healthcare Bhd | Nova Wellness vs. FARM FRESH BERHAD | Nova Wellness vs. YX Precious Metals |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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