Correlation Between KPJ Healthcare and Tenaga Nasional
Can any of the company-specific risk be diversified away by investing in both KPJ Healthcare and Tenaga Nasional 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 Tenaga Nasional 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 Tenaga Nasional Bhd, you can compare the effects of market volatilities on KPJ Healthcare and Tenaga Nasional 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 Tenaga Nasional. Check out your portfolio center. Please also check ongoing floating volatility patterns of KPJ Healthcare and Tenaga Nasional.
Diversification Opportunities for KPJ Healthcare and Tenaga Nasional
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KPJ and Tenaga is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding KPJ Healthcare Bhd and Tenaga Nasional Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaga Nasional 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 Tenaga Nasional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenaga Nasional Bhd has no effect on the direction of KPJ Healthcare i.e., KPJ Healthcare and Tenaga Nasional go up and down completely randomly.
Pair Corralation between KPJ Healthcare and Tenaga Nasional
Assuming the 90 days trading horizon KPJ Healthcare Bhd is expected to generate 1.04 times more return on investment than Tenaga Nasional. However, KPJ Healthcare is 1.04 times more volatile than Tenaga Nasional Bhd. It trades about 0.32 of its potential returns per unit of risk. Tenaga Nasional Bhd is currently generating about -0.08 per unit of risk. If you would invest 211.00 in KPJ Healthcare Bhd on September 3, 2024 and sell it today you would earn a total of 38.00 from holding KPJ Healthcare Bhd or generate 18.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KPJ Healthcare Bhd vs. Tenaga Nasional Bhd
Performance |
| Timeline |
| KPJ Healthcare Bhd |
| Tenaga Nasional Bhd |
KPJ Healthcare and Tenaga Nasional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KPJ Healthcare and Tenaga Nasional
The main advantage of trading using opposite KPJ Healthcare and Tenaga Nasional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KPJ Healthcare position performs unexpectedly, Tenaga Nasional 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 Tenaga Nasional will offset losses from the drop in Tenaga Nasional's long position.| KPJ Healthcare vs. K One Technology Bhd | KPJ Healthcare vs. JF Technology BHD | KPJ Healthcare vs. Ho Hup Construction | KPJ Healthcare vs. TAS Offshore Bhd |
| Tenaga Nasional vs. Binasat Communications Bhd | Tenaga Nasional vs. Southern Steel Bhd | Tenaga Nasional vs. Farm Price Holdings | Tenaga Nasional vs. Sports Toto 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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