Correlation Between Binasat Communications and KPJ Healthcare
Can any of the company-specific risk be diversified away by investing in both Binasat Communications and KPJ Healthcare 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 Binasat Communications and KPJ Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binasat Communications Bhd and KPJ Healthcare Bhd, you can compare the effects of market volatilities on Binasat Communications and KPJ Healthcare 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 Binasat Communications with a short position of KPJ Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binasat Communications and KPJ Healthcare.
Diversification Opportunities for Binasat Communications and KPJ Healthcare
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Binasat and KPJ is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Binasat Communications Bhd and KPJ Healthcare Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPJ Healthcare Bhd and Binasat Communications 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 Binasat Communications Bhd are associated (or correlated) with KPJ Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPJ Healthcare Bhd has no effect on the direction of Binasat Communications i.e., Binasat Communications and KPJ Healthcare go up and down completely randomly.
Pair Corralation between Binasat Communications and KPJ Healthcare
Assuming the 90 days trading horizon Binasat Communications Bhd is expected to under-perform the KPJ Healthcare. In addition to that, Binasat Communications is 1.89 times more volatile than KPJ Healthcare Bhd. It trades about -0.07 of its total potential returns per unit of risk. KPJ Healthcare Bhd is currently generating about 0.17 per unit of volatility. If you would invest 111.00 in KPJ Healthcare Bhd on September 26, 2024 and sell it today you would earn a total of 124.00 from holding KPJ Healthcare Bhd or generate 111.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Binasat Communications Bhd vs. KPJ Healthcare Bhd
Performance |
Timeline |
Binasat Communications |
KPJ Healthcare Bhd |
Binasat Communications and KPJ Healthcare Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Binasat Communications and KPJ Healthcare
The main advantage of trading using opposite Binasat Communications and KPJ Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binasat Communications position performs unexpectedly, KPJ Healthcare 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 KPJ Healthcare will offset losses from the drop in KPJ Healthcare's long position.Binasat Communications vs. Axiata Group Bhd | Binasat Communications vs. Telekom Malaysia Bhd | Binasat Communications vs. TIME Dotcom Bhd | Binasat Communications vs. Scientex Bhd |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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