Correlation Between YTL Hospitality and Cosmos Technology

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

Diversification Opportunities for YTL Hospitality and Cosmos Technology

-0.35

Correlation Coefficient

YTL Hospitality  Cosmos Technology

Very good diversification

The 3 months correlation between YTL and Cosmos is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding YTL Hospitality REIT and Cosmos Technology Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmos Technology 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 Cosmos Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmos Technology has no effect on the direction of YTL Hospitality i.e., YTL Hospitality and Cosmos Technology go up and down completely randomly.

Pair Corralation between YTL Hospitality and Cosmos Technology

Assuming the 90 days trading horizon YTL Hospitality REIT is expected to generate 0.38 times more return on investment than Cosmos Technology. However, YTL Hospitality REIT is 2.67 times less risky than Cosmos Technology. It trades about 0.07 of its potential returns per unit of risk. Cosmos Technology International is currently generating about -0.01 per unit of risk. If you would invest  86.00  in YTL Hospitality REIT on September 29, 2024 and sell it today you would earn a total of  32.00  from holding YTL Hospitality REIT or generate 37.21% return on investment over 90 days.

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

YTL Hospitality REIT  vs.  Cosmos Technology Internationa

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.

Cosmos Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cosmos Technology International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Cosmos Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with YTL Hospitality and Cosmos Technology

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

The idea behind YTL Hospitality REIT and Cosmos Technology International 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.