Correlation Between Shangri La and Kumpulan Kitacon

Can any of the company-specific risk be diversified away by investing in both Shangri La and Kumpulan Kitacon 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 Shangri La and Kumpulan Kitacon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shangri La Hotels and Kumpulan Kitacon Berhad, you can compare the effects of market volatilities on Shangri La and Kumpulan Kitacon 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 Shangri La with a short position of Kumpulan Kitacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shangri La and Kumpulan Kitacon.

Diversification Opportunities for Shangri La and Kumpulan Kitacon

0.47

Correlation Coefficient

Shangri La  Kumpulan Kitacon

Very weak diversification

The 3 months correlation between Shangri and Kumpulan is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Shangri La Hotels and Kumpulan Kitacon Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumpulan Kitacon Berhad and Shangri La 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 Shangri La Hotels are associated (or correlated) with Kumpulan Kitacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumpulan Kitacon Berhad has no effect on the direction of Shangri La i.e., Shangri La and Kumpulan Kitacon go up and down completely randomly.

Pair Corralation between Shangri La and Kumpulan Kitacon

Assuming the 90 days trading horizon Shangri La Hotels is expected to generate 0.63 times more return on investment than Kumpulan Kitacon. However, Shangri La Hotels is 1.58 times less risky than Kumpulan Kitacon. It trades about 0.02 of its potential returns per unit of risk. Kumpulan Kitacon Berhad is currently generating about 0.01 per unit of risk. If you would invest  201.00  in Shangri La Hotels on September 5, 2024 and sell it today you would earn a total of  2.00  from holding Shangri La Hotels or generate 1.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Shangri La Hotels  vs.  Kumpulan Kitacon Berhad

Shangri La Hotels

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shangri La Hotels are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Shangri La is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Kumpulan Kitacon Berhad

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Shangri La and Kumpulan Kitacon

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

The idea behind Shangri La Hotels and Kumpulan Kitacon Berhad 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.