Correlation Between KPJ Healthcare and IOI Bhd
Can any of the company-specific risk be diversified away by investing in both KPJ Healthcare and IOI Bhd 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 IOI Bhd 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 IOI Bhd, you can compare the effects of market volatilities on KPJ Healthcare and IOI Bhd 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 IOI Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of KPJ Healthcare and IOI Bhd.
Diversification Opportunities for KPJ Healthcare and IOI Bhd
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KPJ and IOI is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding KPJ Healthcare Bhd and IOI Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IOI Bhd 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 IOI Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IOI Bhd has no effect on the direction of KPJ Healthcare i.e., KPJ Healthcare and IOI Bhd go up and down completely randomly.
Pair Corralation between KPJ Healthcare and IOI Bhd
Assuming the 90 days trading horizon KPJ Healthcare Bhd is expected to generate 1.22 times more return on investment than IOI Bhd. However, KPJ Healthcare is 1.22 times more volatile than IOI Bhd. It trades about 0.17 of its potential returns per unit of risk. IOI Bhd is currently generating about 0.02 per unit of risk. If you would invest 111.00 in KPJ Healthcare Bhd on August 31, 2024 and sell it today you would earn a total of 138.00 from holding KPJ Healthcare Bhd or generate 124.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KPJ Healthcare Bhd vs. IOI Bhd
Performance |
| Timeline |
| KPJ Healthcare Bhd |
| IOI Bhd |
KPJ Healthcare and IOI Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KPJ Healthcare and IOI Bhd
The main advantage of trading using opposite KPJ Healthcare and IOI Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KPJ Healthcare position performs unexpectedly, IOI Bhd 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 IOI Bhd will offset losses from the drop in IOI Bhd's long position.| KPJ Healthcare vs. Alliance Financial Group | KPJ Healthcare vs. Eversafe Rubber Bhd | KPJ Healthcare vs. Public Bank Bhd | KPJ Healthcare vs. Kossan Rubber Industries |
| IOI Bhd vs. Nestle Bhd | IOI Bhd vs. FGV Holdings Bhd | IOI Bhd vs. British American Tobacco | IOI Bhd vs. FARM FRESH BERHAD |
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 CEOs Directory module to screen CEOs from public companies around the world.
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