Correlation Between Insas Bhd and YTL Hospitality

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

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

Diversification Opportunities for Insas Bhd and YTL Hospitality

0.83

Correlation Coefficient

Insas Bhd  YTL Hospitality

Very poor diversification

The 3 months correlation between Insas and YTL is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Insas Bhd 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 Insas Bhd 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 Insas Bhd 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 Insas Bhd i.e., Insas Bhd and YTL Hospitality go up and down completely randomly.

Pair Corralation between Insas Bhd and YTL Hospitality

Assuming the 90 days trading horizon Insas Bhd is expected to generate 0.96 times more return on investment than YTL Hospitality. However, Insas Bhd is 1.04 times less risky than YTL Hospitality. It trades about 0.01 of its potential returns per unit of risk. YTL Hospitality REIT is currently generating about -0.14 per unit of risk. If you would invest  92.00  in Insas Bhd on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Insas Bhd or generate 0.0% return on investment over 90 days.

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

Insas Bhd  vs.  YTL Hospitality REIT

Insas Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Insas Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Insas Bhd is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

YTL Hospitality REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days YTL Hospitality REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Insas Bhd and YTL Hospitality

The main advantage of trading using opposite Insas Bhd and YTL Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insas Bhd 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.

The idea behind Insas Bhd and YTL Hospitality REIT 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.