Correlation Between Al Aqar and Nova Wellness
Can any of the company-specific risk be diversified away by investing in both Al Aqar 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 Al Aqar and Nova Wellness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Al Aqar Healthcare and Nova Wellness Group, you can compare the effects of market volatilities on Al Aqar 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 Al Aqar with a short position of Nova Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Aqar and Nova Wellness.
Diversification Opportunities for Al Aqar and Nova Wellness
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between 5116 and Nova is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Al Aqar Healthcare 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 Al Aqar 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 Al Aqar Healthcare 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 Al Aqar i.e., Al Aqar and Nova Wellness go up and down completely randomly.
Pair Corralation between Al Aqar and Nova Wellness
Assuming the 90 days trading horizon Al Aqar Healthcare is expected to generate 0.44 times more return on investment than Nova Wellness. However, Al Aqar Healthcare is 2.28 times less risky than Nova Wellness. It trades about 0.06 of its potential returns per unit of risk. Nova Wellness Group is currently generating about -0.04 per unit of risk. If you would invest 121.00 in Al Aqar Healthcare on August 26, 2024 and sell it today you would earn a total of 16.00 from holding Al Aqar Healthcare or generate 13.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Al Aqar Healthcare vs. Nova Wellness Group
Performance |
| Timeline |
| Al Aqar Healthcare |
| Nova Wellness Group |
Al Aqar and Nova Wellness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Al Aqar and Nova Wellness
The main advantage of trading using opposite Al Aqar and Nova Wellness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Al Aqar 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.| Al Aqar vs. Sapura Industrial Bhd | Al Aqar vs. CB Industrial Product | Al Aqar vs. Riverview Rubber Estates | Al Aqar vs. Central Industrial Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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