Correlation Between YTLBerhad and Legacy Education

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

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

Diversification Opportunities for YTLBerhad and Legacy Education

0.39

Correlation Coefficient

YTLBerhad  Legacy Education

Weak diversification

The 3 months correlation between YTLBerhad and Legacy is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding YTL Berhad and Legacy Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legacy Education and YTLBerhad 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 Berhad are associated (or correlated) with Legacy Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legacy Education has no effect on the direction of YTLBerhad i.e., YTLBerhad and Legacy Education go up and down completely randomly.

Pair Corralation between YTLBerhad and Legacy Education

Assuming the 90 days horizon YTL Berhad is expected to under-perform the Legacy Education. But the pink sheet apears to be less risky and, when comparing its historical volatility, YTL Berhad is 5.68 times less risky than Legacy Education. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Legacy Education is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  820.00  in Legacy Education on December 30, 2024 and sell it today you would lose (89.00) from holding Legacy Education or give up 10.85% of portfolio value over 90 days.

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

YTL Berhad  vs.  Legacy Education

YTL Berhad

Risk-Adjusted Performance

Very Weak

Over the last 90 days YTL Berhad has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Legacy Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Legacy Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Legacy Education is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with YTLBerhad and Legacy Education

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

The idea behind YTL Berhad and Legacy Education 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 Stocks Directory module to find actively traded stocks across global markets.