Correlation Between YTL Hospitality and Hong Leong
Can any of the company-specific risk be diversified away by investing in both YTL Hospitality and Hong Leong 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 YTL Hospitality and Hong Leong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YTL Hospitality REIT and Hong Leong Bank, you can compare the effects of market volatilities on YTL Hospitality and Hong Leong 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 YTL Hospitality with a short position of Hong Leong. Check out your portfolio center. Please also check ongoing floating volatility patterns of YTL Hospitality and Hong Leong.
Diversification Opportunities for YTL Hospitality and Hong Leong
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between YTL and Hong is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding YTL Hospitality REIT and Hong Leong Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Leong Bank and YTL Hospitality 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 YTL Hospitality REIT are associated (or correlated) with Hong Leong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Leong Bank has no effect on the direction of YTL Hospitality i.e., YTL Hospitality and Hong Leong go up and down completely randomly.
Pair Corralation between YTL Hospitality and Hong Leong
Assuming the 90 days trading horizon YTL Hospitality REIT is expected to generate 1.47 times more return on investment than Hong Leong. However, YTL Hospitality is 1.47 times more volatile than Hong Leong Bank. It trades about 0.1 of its potential returns per unit of risk. Hong Leong Bank is currently generating about 0.02 per unit of risk. If you would invest 76.00 in YTL Hospitality REIT on August 30, 2024 and sell it today you would earn a total of 44.00 from holding YTL Hospitality REIT or generate 57.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
YTL Hospitality REIT vs. Hong Leong Bank
Performance |
| Timeline |
| YTL Hospitality REIT |
| Hong Leong Bank |
YTL Hospitality and Hong Leong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YTL Hospitality and Hong Leong
The main advantage of trading using opposite YTL Hospitality and Hong Leong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YTL Hospitality position performs unexpectedly, Hong Leong 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 Hong Leong will offset losses from the drop in Hong Leong's long position.| YTL Hospitality vs. Shangri La Hotels | YTL Hospitality vs. Impiana Hotels Bhd | YTL Hospitality vs. Sports Toto Berhad | YTL Hospitality vs. Choo Bee Metal |
| Hong Leong vs. Public Bank Bhd | Hong Leong vs. Dnonce Tech Bhd | Hong Leong vs. Carlsberg Brewery Malaysia | Hong Leong vs. Resintech Bhd |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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