Correlation Between YTL Hospitality and Genetec Technology

Can any of the company-specific risk be diversified away by investing in both YTL Hospitality and Genetec Technology 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 Genetec Technology 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 Genetec Technology Bhd, you can compare the effects of market volatilities on YTL Hospitality and Genetec Technology 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 Genetec Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of YTL Hospitality and Genetec Technology.

Diversification Opportunities for YTL Hospitality and Genetec Technology

-0.57

Correlation Coefficient

YTL Hospitality  Genetec Technology

Excellent diversification

The 3 months correlation between YTL and Genetec is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding YTL Hospitality REIT and Genetec Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genetec Technology Bhd 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 Genetec Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genetec Technology Bhd has no effect on the direction of YTL Hospitality i.e., YTL Hospitality and Genetec Technology go up and down completely randomly.

Pair Corralation between YTL Hospitality and Genetec Technology

Assuming the 90 days trading horizon YTL Hospitality REIT is expected to under-perform the Genetec Technology. But the stock apears to be less risky and, when comparing its historical volatility, YTL Hospitality REIT is 4.11 times less risky than Genetec Technology. The stock trades about -0.06 of its potential returns per unit of risk. The Genetec Technology Bhd is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  124.00  in Genetec Technology Bhd on October 22, 2024 and sell it today you would earn a total of  15.00  from holding Genetec Technology Bhd or generate 12.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

YTL Hospitality REIT  vs.  Genetec Technology Bhd

YTL Hospitality REIT

Risk-Adjusted Performance

0 of 100

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 quite persistent basic indicators, YTL Hospitality is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Genetec Technology Bhd

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genetec Technology Bhd are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Genetec Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YTL Hospitality and Genetec Technology

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

The idea behind YTL Hospitality REIT and Genetec Technology 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.

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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.