Correlation Between IHH Healthcare and Hong Leong
Can any of the company-specific risk be diversified away by investing in both IHH Healthcare and Hong Leong 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 IHH Healthcare and Hong Leong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IHH Healthcare Bhd and Hong Leong Bank, you can compare the effects of market volatilities on IHH Healthcare and Hong Leong 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 IHH Healthcare with a short position of Hong Leong. Check out your portfolio center. Please also check ongoing floating volatility patterns of IHH Healthcare and Hong Leong.
Diversification Opportunities for IHH Healthcare and Hong Leong
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IHH and Hong is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding IHH Healthcare Bhd and Hong Leong Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Leong Bank and IHH Healthcare 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 IHH Healthcare Bhd are associated (or correlated) with Hong Leong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Leong Bank has no effect on the direction of IHH Healthcare i.e., IHH Healthcare and Hong Leong go up and down completely randomly.
Pair Corralation between IHH Healthcare and Hong Leong
Assuming the 90 days trading horizon IHH Healthcare Bhd is expected to under-perform the Hong Leong. In addition to that, IHH Healthcare is 1.21 times more volatile than Hong Leong Bank. It trades about -0.15 of its total potential returns per unit of risk. Hong Leong Bank is currently generating about -0.1 per unit of volatility. If you would invest 2,042 in Hong Leong Bank on November 2, 2024 and sell it today you would lose (24.00) from holding Hong Leong Bank or give up 1.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IHH Healthcare Bhd vs. Hong Leong Bank
Performance |
| Timeline |
| IHH Healthcare Bhd |
| Hong Leong Bank |
IHH Healthcare and Hong Leong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IHH Healthcare and Hong Leong
The main advantage of trading using opposite IHH Healthcare and Hong Leong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IHH Healthcare position performs unexpectedly, Hong Leong 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 Hong Leong will offset losses from the drop in Hong Leong's long position.| IHH Healthcare vs. Cloudpoint Technology Berhad | IHH Healthcare vs. TAS Offshore Bhd | IHH Healthcare vs. Icon Offshore Bhd | IHH Healthcare vs. Sports Toto Berhad |
| Hong Leong vs. Malayan Banking Bhd | Hong Leong vs. Public Bank Bhd | Hong Leong vs. RHB Bank Bhd | Hong Leong vs. Nexgram Holdings 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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