Correlation Between CIMB Group and KPJ Healthcare
Can any of the company-specific risk be diversified away by investing in both CIMB Group and KPJ 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 CIMB Group and KPJ Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CIMB Group Holdings and KPJ Healthcare Bhd, you can compare the effects of market volatilities on CIMB Group and KPJ 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 CIMB Group with a short position of KPJ Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIMB Group and KPJ Healthcare.
Diversification Opportunities for CIMB Group and KPJ Healthcare
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CIMB and KPJ is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding CIMB Group Holdings and KPJ Healthcare Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPJ Healthcare Bhd and CIMB Group 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 CIMB Group Holdings are associated (or correlated) with KPJ Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPJ Healthcare Bhd has no effect on the direction of CIMB Group i.e., CIMB Group and KPJ Healthcare go up and down completely randomly.
Pair Corralation between CIMB Group and KPJ Healthcare
Assuming the 90 days trading horizon CIMB Group is expected to generate 2.3 times less return on investment than KPJ Healthcare. But when comparing it to its historical volatility, CIMB Group Holdings is 1.33 times less risky than KPJ Healthcare. It trades about 0.07 of its potential returns per unit of risk. KPJ Healthcare Bhd is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 107.00 in KPJ Healthcare Bhd on January 15, 2025 and sell it today you would earn a total of 163.00 from holding KPJ Healthcare Bhd or generate 152.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CIMB Group Holdings vs. KPJ Healthcare Bhd
Performance |
| Timeline |
| CIMB Group Holdings |
| KPJ Healthcare Bhd |
CIMB Group and KPJ Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CIMB Group and KPJ Healthcare
The main advantage of trading using opposite CIMB Group and KPJ Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIMB Group position performs unexpectedly, KPJ 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 KPJ Healthcare will offset losses from the drop in KPJ Healthcare's long position.| CIMB Group vs. Malayan Banking Bhd | CIMB Group vs. Public Bank Bhd | CIMB Group vs. Petronas Chemicals Group | CIMB Group vs. Tenaga Nasional Bhd |
| KPJ Healthcare vs. Genetec Technology Bhd | KPJ Healthcare vs. Al Aqar Healthcare | KPJ Healthcare vs. Eonmetall Group Bhd | KPJ Healthcare vs. PIE Industrial 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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