Correlation Between Alliance Financial and KPJ Healthcare
Can any of the company-specific risk be diversified away by investing in both Alliance Financial 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 Alliance Financial and KPJ Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Financial Group and KPJ Healthcare Bhd, you can compare the effects of market volatilities on Alliance Financial 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 Alliance Financial with a short position of KPJ Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Financial and KPJ Healthcare.
Diversification Opportunities for Alliance Financial and KPJ Healthcare
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alliance and KPJ is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Financial Group 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 Alliance Financial 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 Alliance Financial Group 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 Alliance Financial i.e., Alliance Financial and KPJ Healthcare go up and down completely randomly.
Pair Corralation between Alliance Financial and KPJ Healthcare
Assuming the 90 days trading horizon Alliance Financial is expected to generate 2.59 times less return on investment than KPJ Healthcare. But when comparing it to its historical volatility, Alliance Financial Group is 1.4 times less risky than KPJ Healthcare. It trades about 0.08 of its potential returns per unit of risk. KPJ Healthcare Bhd is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 91.00 in KPJ Healthcare Bhd on September 2, 2024 and sell it today you would earn a total of 158.00 from holding KPJ Healthcare Bhd or generate 173.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alliance Financial Group vs. KPJ Healthcare Bhd
Performance |
| Timeline |
| Alliance Financial |
| KPJ Healthcare Bhd |
Alliance Financial and KPJ Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Financial and KPJ Healthcare
The main advantage of trading using opposite Alliance Financial and KPJ Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Financial 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.| Alliance Financial vs. Aeon Credit Service | Alliance Financial vs. Digistar Bhd | Alliance Financial vs. Minetech Resources Bhd | Alliance Financial vs. Swift Haulage Bhd |
| KPJ Healthcare vs. IHH Healthcare Bhd | KPJ Healthcare vs. Digistar Bhd | KPJ Healthcare vs. Minetech Resources Bhd | KPJ Healthcare vs. Swift Haulage 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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