Correlation Between Techfast Holdings and Impiana Hotels

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

By analyzing existing cross correlation between Techfast Holdings Bhd and Impiana Hotels Bhd, you can compare the effects of market volatilities on Techfast Holdings and Impiana Hotels 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 Techfast Holdings with a short position of Impiana Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Techfast Holdings and Impiana Hotels.

Diversification Opportunities for Techfast Holdings and Impiana Hotels

0.68

Correlation Coefficient

Techfast Holdings  Impiana Hotels

Poor diversification

The 3 months correlation between Techfast and Impiana is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Techfast Holdings Bhd and Impiana Hotels Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impiana Hotels Bhd and Techfast Holdings 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 Techfast Holdings Bhd are associated (or correlated) with Impiana Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impiana Hotels Bhd has no effect on the direction of Techfast Holdings i.e., Techfast Holdings and Impiana Hotels go up and down completely randomly.

Pair Corralation between Techfast Holdings and Impiana Hotels

Assuming the 90 days trading horizon Techfast Holdings Bhd is expected to under-perform the Impiana Hotels. In addition to that, Techfast Holdings is 1.69 times more volatile than Impiana Hotels Bhd. It trades about -0.11 of its total potential returns per unit of risk. Impiana Hotels Bhd is currently generating about -0.03 per unit of volatility. If you would invest  23.00  in Impiana Hotels Bhd on December 11, 2024 and sell it today you would lose (1.00) from holding Impiana Hotels Bhd or give up 4.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Techfast Holdings Bhd  vs.  Impiana Hotels Bhd

Techfast Holdings Bhd

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Techfast Holdings Bhd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Techfast Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Impiana Hotels Bhd

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Impiana Hotels Bhd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Impiana Hotels may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Techfast Holdings and Impiana Hotels

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

The idea behind Techfast Holdings Bhd and Impiana Hotels Bhd 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.

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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.