Correlation Between IOI Bhd and Nova Wellness
Can any of the company-specific risk be diversified away by investing in both IOI Bhd and Nova Wellness 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 IOI Bhd and Nova Wellness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IOI Bhd and Nova Wellness Group, you can compare the effects of market volatilities on IOI Bhd and Nova Wellness 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 IOI Bhd with a short position of Nova Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of IOI Bhd and Nova Wellness.
Diversification Opportunities for IOI Bhd and Nova Wellness
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IOI and Nova is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding IOI Bhd and Nova Wellness Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Wellness Group and IOI Bhd 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 IOI Bhd are associated (or correlated) with Nova Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Wellness Group has no effect on the direction of IOI Bhd i.e., IOI Bhd and Nova Wellness go up and down completely randomly.
Pair Corralation between IOI Bhd and Nova Wellness
Assuming the 90 days trading horizon IOI Bhd is expected to generate 0.5 times more return on investment than Nova Wellness. However, IOI Bhd is 1.98 times less risky than Nova Wellness. It trades about 0.01 of its potential returns per unit of risk. Nova Wellness Group is currently generating about -0.07 per unit of risk. If you would invest 365.00 in IOI Bhd on November 5, 2024 and sell it today you would earn a total of 7.00 from holding IOI Bhd or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.12% |
| Values | Daily Returns |
IOI Bhd vs. Nova Wellness Group
Performance |
| Timeline |
| IOI Bhd |
| Nova Wellness Group |
IOI Bhd and Nova Wellness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IOI Bhd and Nova Wellness
The main advantage of trading using opposite IOI Bhd and Nova Wellness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IOI Bhd position performs unexpectedly, Nova Wellness 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 Nova Wellness will offset losses from the drop in Nova Wellness' long position.| IOI Bhd vs. BP Plastics Holding | IOI Bhd vs. Kluang Rubber | IOI Bhd vs. Nova Wellness Group | IOI Bhd vs. KPJ Healthcare Bhd |
| Nova Wellness vs. Oriental Food Industries | Nova Wellness vs. Malaysia Steel Works | Nova Wellness vs. British American Tobacco | Nova Wellness vs. Sports Toto Berhad |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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