Correlation Between EMCOR and YTL Berhad
Can any of the company-specific risk be diversified away by investing in both EMCOR and YTL Berhad 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 EMCOR and YTL Berhad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMCOR Group and YTL Berhad, you can compare the effects of market volatilities on EMCOR and YTL Berhad 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 EMCOR with a short position of YTL Berhad. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCOR and YTL Berhad.
Diversification Opportunities for EMCOR and YTL Berhad
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EMCOR and YTL is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and YTL Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YTL Berhad and EMCOR 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 EMCOR Group are associated (or correlated) with YTL Berhad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YTL Berhad has no effect on the direction of EMCOR i.e., EMCOR and YTL Berhad go up and down completely randomly.
Pair Corralation between EMCOR and YTL Berhad
Considering the 90-day investment horizon EMCOR Group is expected to under-perform the YTL Berhad. But the stock apears to be less risky and, when comparing its historical volatility, EMCOR Group is 1.39 times less risky than YTL Berhad. The stock trades about -0.18 of its potential returns per unit of risk. The YTL Berhad is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 41.00 in YTL Berhad on September 12, 2024 and sell it today you would earn a total of 5.00 from holding YTL Berhad or generate 12.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
EMCOR Group vs. YTL Berhad
Performance |
| Timeline |
| EMCOR Group |
| YTL Berhad |
EMCOR and YTL Berhad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMCOR and YTL Berhad
The main advantage of trading using opposite EMCOR and YTL Berhad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCOR position performs unexpectedly, YTL Berhad 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 Berhad will offset losses from the drop in YTL Berhad's long position.The idea behind EMCOR Group and YTL 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.| YTL Berhad vs. Copa Holdings SA | YTL Berhad vs. United Airlines Holdings | YTL Berhad vs. Delta Air Lines | YTL Berhad vs. SkyWest |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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