Correlation Between Sime Darby and YTL Hospitality
Can any of the company-specific risk be diversified away by investing in both Sime Darby and YTL Hospitality 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 Sime Darby and YTL Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sime Darby Plantation and YTL Hospitality REIT, you can compare the effects of market volatilities on Sime Darby and YTL Hospitality 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 Sime Darby with a short position of YTL Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sime Darby and YTL Hospitality.
Diversification Opportunities for Sime Darby and YTL Hospitality
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sime and YTL is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sime Darby Plantation and YTL Hospitality REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YTL Hospitality REIT and Sime Darby 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 Sime Darby Plantation are associated (or correlated) with YTL Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YTL Hospitality REIT has no effect on the direction of Sime Darby i.e., Sime Darby and YTL Hospitality go up and down completely randomly.
Pair Corralation between Sime Darby and YTL Hospitality
Assuming the 90 days trading horizon Sime Darby Plantation is expected to generate 2.18 times more return on investment than YTL Hospitality. However, Sime Darby is 2.18 times more volatile than YTL Hospitality REIT. It trades about 0.02 of its potential returns per unit of risk. YTL Hospitality REIT is currently generating about -0.04 per unit of risk. If you would invest 495.00 in Sime Darby Plantation on September 4, 2024 and sell it today you would earn a total of 2.00 from holding Sime Darby Plantation or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sime Darby Plantation vs. YTL Hospitality REIT
Performance |
| Timeline |
| Sime Darby Plantation |
| YTL Hospitality REIT |
Sime Darby and YTL Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sime Darby and YTL Hospitality
The main advantage of trading using opposite Sime Darby and YTL Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sime Darby position performs unexpectedly, YTL Hospitality 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 YTL Hospitality will offset losses from the drop in YTL Hospitality's long position.| Sime Darby vs. Cosmos Technology International | Sime Darby vs. Riverview Rubber Estates | Sime Darby vs. Daya Materials Bhd | Sime Darby vs. CPE Technology Berhad |
| YTL Hospitality vs. Minetech Resources Bhd | YTL Hospitality vs. Swift Haulage Bhd | YTL Hospitality vs. Insas Bhd | YTL Hospitality vs. Bina Darulaman 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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