Correlation Between ITMAX System and KPJ Healthcare
Can any of the company-specific risk be diversified away by investing in both ITMAX System 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 ITMAX System and KPJ Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITMAX System Berhad and KPJ Healthcare Bhd, you can compare the effects of market volatilities on ITMAX System 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 ITMAX System with a short position of KPJ Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITMAX System and KPJ Healthcare.
Diversification Opportunities for ITMAX System and KPJ Healthcare
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ITMAX and KPJ is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding ITMAX System Berhad 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 ITMAX System 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 ITMAX System Berhad 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 ITMAX System i.e., ITMAX System and KPJ Healthcare go up and down completely randomly.
Pair Corralation between ITMAX System and KPJ Healthcare
Assuming the 90 days trading horizon ITMAX System is expected to generate 5.54 times less return on investment than KPJ Healthcare. But when comparing it to its historical volatility, ITMAX System Berhad is 1.17 times less risky than KPJ Healthcare. It trades about 0.02 of its potential returns per unit of risk. KPJ Healthcare Bhd is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 207.00 in KPJ Healthcare Bhd on September 26, 2024 and sell it today you would earn a total of 28.00 from holding KPJ Healthcare Bhd or generate 13.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
ITMAX System Berhad vs. KPJ Healthcare Bhd
Performance |
Timeline |
ITMAX System Berhad |
KPJ Healthcare Bhd |
ITMAX System and KPJ Healthcare Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ITMAX System and KPJ Healthcare
The main advantage of trading using opposite ITMAX System and KPJ Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITMAX System 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.ITMAX System vs. Malayan Banking Bhd | ITMAX System vs. Public Bank Bhd | ITMAX System vs. Petronas Chemicals Group | ITMAX System vs. Tenaga Nasional 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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