Correlation Between IOI Bhd and Duopharma Biotech

Can any of the company-specific risk be diversified away by investing in both IOI Bhd and Duopharma Biotech 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 IOI Bhd and Duopharma Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IOI Bhd and Duopharma Biotech Bhd, you can compare the effects of market volatilities on IOI Bhd and Duopharma Biotech 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 IOI Bhd with a short position of Duopharma Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of IOI Bhd and Duopharma Biotech.

Diversification Opportunities for IOI Bhd and Duopharma Biotech

-0.57

Correlation Coefficient

IOI Bhd  Duopharma Biotech

Excellent diversification

The 3 months correlation between IOI and Duopharma is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding IOI Bhd and Duopharma Biotech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duopharma Biotech Bhd and IOI Bhd 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 IOI Bhd are associated (or correlated) with Duopharma Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duopharma Biotech Bhd has no effect on the direction of IOI Bhd i.e., IOI Bhd and Duopharma Biotech go up and down completely randomly.

Pair Corralation between IOI Bhd and Duopharma Biotech

Assuming the 90 days trading horizon IOI Bhd is expected to generate 5.08 times less return on investment than Duopharma Biotech. But when comparing it to its historical volatility, IOI Bhd is 1.63 times less risky than Duopharma Biotech. It trades about 0.03 of its potential returns per unit of risk. Duopharma Biotech Bhd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  117.00  in Duopharma Biotech Bhd on September 13, 2024 and sell it today you would earn a total of  9.00  from holding Duopharma Biotech Bhd or generate 7.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

IOI Bhd  vs.  Duopharma Biotech Bhd

IOI Bhd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IOI Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, IOI Bhd is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Duopharma Biotech Bhd

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Duopharma Biotech Bhd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Duopharma Biotech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IOI Bhd and Duopharma Biotech

The main advantage of trading using opposite IOI Bhd and Duopharma Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IOI Bhd position performs unexpectedly, Duopharma Biotech 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 Duopharma Biotech will offset losses from the drop in Duopharma Biotech's long position.

The idea behind IOI Bhd and Duopharma Biotech Bhd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.