Correlation Between KPJ Healthcare and Nova Wellness
Can any of the company-specific risk be diversified away by investing in both KPJ Healthcare 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 KPJ Healthcare and Nova Wellness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KPJ Healthcare Bhd and Nova Wellness Group, you can compare the effects of market volatilities on KPJ Healthcare 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 KPJ Healthcare with a short position of Nova Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of KPJ Healthcare and Nova Wellness.
Diversification Opportunities for KPJ Healthcare and Nova Wellness
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KPJ and Nova is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding KPJ Healthcare 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 KPJ 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 KPJ Healthcare 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 KPJ Healthcare i.e., KPJ Healthcare and Nova Wellness go up and down completely randomly.
Pair Corralation between KPJ Healthcare and Nova Wellness
Assuming the 90 days trading horizon KPJ Healthcare Bhd is expected to generate 0.65 times more return on investment than Nova Wellness. However, KPJ Healthcare Bhd is 1.55 times less risky than Nova Wellness. It trades about 0.29 of its potential returns per unit of risk. Nova Wellness Group is currently generating about 0.01 per unit of risk. If you would invest 212.00 in KPJ Healthcare Bhd on August 30, 2024 and sell it today you would earn a total of 35.00 from holding KPJ Healthcare Bhd or generate 16.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.35% |
| Values | Daily Returns |
KPJ Healthcare Bhd vs. Nova Wellness Group
Performance |
| Timeline |
| KPJ Healthcare Bhd |
| Nova Wellness Group |
KPJ Healthcare and Nova Wellness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KPJ Healthcare and Nova Wellness
The main advantage of trading using opposite KPJ Healthcare and Nova Wellness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KPJ Healthcare 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.| KPJ Healthcare vs. Computer Forms Bhd | KPJ Healthcare vs. Impiana Hotels Bhd | KPJ Healthcare vs. Berjaya Food Bhd | KPJ Healthcare vs. Riverview Rubber Estates |
| Nova Wellness vs. ES Ceramics Technology | Nova Wellness vs. IHH Healthcare Bhd | Nova Wellness vs. Sports Toto Berhad | Nova Wellness vs. Senheng New Retail |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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