Correlation Between PPB Group and Nova Wellness
Can any of the company-specific risk be diversified away by investing in both PPB Group 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 PPB Group and Nova Wellness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPB Group Bhd and Nova Wellness Group, you can compare the effects of market volatilities on PPB Group 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 PPB Group with a short position of Nova Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPB Group and Nova Wellness.
Diversification Opportunities for PPB Group and Nova Wellness
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PPB and Nova is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding PPB Group 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 PPB 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 PPB Group 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 PPB Group i.e., PPB Group and Nova Wellness go up and down completely randomly.
Pair Corralation between PPB Group and Nova Wellness
Assuming the 90 days trading horizon PPB Group Bhd is expected to under-perform the Nova Wellness. But the stock apears to be less risky and, when comparing its historical volatility, PPB Group Bhd is 1.85 times less risky than Nova Wellness. The stock trades about -0.21 of its potential returns per unit of risk. The Nova Wellness Group is currently generating about -0.08 of returns per unit of risk over similar time horizon. 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 |
PPB Group Bhd vs. Nova Wellness Group
Performance |
| Timeline |
| PPB Group Bhd |
| Nova Wellness Group |
PPB Group and Nova Wellness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPB Group and Nova Wellness
The main advantage of trading using opposite PPB Group and Nova Wellness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPB Group 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.| PPB Group vs. Nestle Bhd | PPB Group vs. IOI Bhd | PPB Group vs. FGV Holdings Bhd | PPB Group vs. British American Tobacco |
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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