Correlation Between YTL Hospitality and CB Industrial

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

Diversification Opportunities for YTL Hospitality and CB Industrial

0.53

Correlation Coefficient

YTL Hospitality  CB Industrial

Very weak diversification

The 3 months correlation between YTL and 7076 is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding YTL Hospitality REIT and CB Industrial Product in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CB Industrial Product 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 CB Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CB Industrial Product has no effect on the direction of YTL Hospitality i.e., YTL Hospitality and CB Industrial go up and down completely randomly.

Pair Corralation between YTL Hospitality and CB Industrial

Assuming the 90 days trading horizon YTL Hospitality REIT is expected to generate 0.79 times more return on investment than CB Industrial. However, YTL Hospitality REIT is 1.27 times less risky than CB Industrial. It trades about -0.14 of its potential returns per unit of risk. CB Industrial Product is currently generating about -0.22 per unit of risk. If you would invest  116.00  in YTL Hospitality REIT on December 30, 2024 and sell it today you would lose (12.00) from holding YTL Hospitality REIT or give up 10.34% of portfolio value over 90 days.

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

YTL Hospitality REIT  vs.  CB Industrial Product

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.

CB Industrial Product

Risk-Adjusted Performance

Very Weak

Over the last 90 days CB Industrial Product has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with YTL Hospitality and CB Industrial

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

The idea behind YTL Hospitality REIT and CB Industrial Product 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.