Correlation Between Neogen and IHH Healthcare

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

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

Diversification Opportunities for Neogen and IHH Healthcare

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Correlation Coefficient

Neogen  IHH Healthcare

Pay attention - limited upside

The 3 months correlation between Neogen and IHH is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Neogen and IHH Healthcare Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IHH Healthcare Berhad and Neogen 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 Neogen are associated (or correlated) with IHH Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IHH Healthcare Berhad has no effect on the direction of Neogen i.e., Neogen and IHH Healthcare go up and down completely randomly.

Pair Corralation between Neogen and IHH Healthcare

Given the investment horizon of 90 days Neogen is expected to under-perform the IHH Healthcare. In addition to that, Neogen is 1.67 times more volatile than IHH Healthcare Berhad. It trades about -0.01 of its total potential returns per unit of risk. IHH Healthcare Berhad is currently generating about -0.01 per unit of volatility. If you would invest  134.00  in IHH Healthcare Berhad on September 29, 2024 and sell it today you would lose (15.00) from holding IHH Healthcare Berhad or give up 11.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	68.35%
Values	Daily Returns

Neogen  vs.  IHH Healthcare Berhad

Neogen

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Neogen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

IHH Healthcare Berhad

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IHH Healthcare Berhad has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, IHH Healthcare is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Neogen and IHH Healthcare

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

The idea behind Neogen and IHH Healthcare Berhad 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.