Correlation Between Microlink Solutions and YTL Hospitality

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Can any of the company-specific risk be diversified away by investing in both Microlink Solutions and YTL Hospitality 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 Microlink Solutions and YTL Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microlink Solutions Bhd and YTL Hospitality REIT, you can compare the effects of market volatilities on Microlink Solutions and YTL Hospitality 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 Microlink Solutions with a short position of YTL Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microlink Solutions and YTL Hospitality.

Diversification Opportunities for Microlink Solutions and YTL Hospitality

0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between Microlink and YTL is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Microlink Solutions Bhd and YTL Hospitality REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YTL Hospitality REIT and Microlink Solutions 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 Microlink Solutions Bhd are associated (or correlated) with YTL Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YTL Hospitality REIT has no effect on the direction of Microlink Solutions i.e., Microlink Solutions and YTL Hospitality go up and down completely randomly.

Pair Corralation between Microlink Solutions and YTL Hospitality

Assuming the 90 days trading horizon Microlink Solutions Bhd is expected to generate 16.6 times more return on investment than YTL Hospitality. However, Microlink Solutions is 16.6 times more volatile than YTL Hospitality REIT. It trades about 0.3 of its potential returns per unit of risk. YTL Hospitality REIT is currently generating about 0.0 per unit of risk. If you would invest  12.00  in Microlink Solutions Bhd on September 24, 2024 and sell it today you would earn a total of  10.00  from holding Microlink Solutions Bhd or generate 83.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Microlink Solutions Bhd  vs.  YTL Hospitality REIT

 Performance 
       Timeline  
Microlink Solutions Bhd 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Microlink Solutions Bhd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Microlink Solutions disclosed solid returns over the last few months and may actually be approaching a breakup point.
YTL Hospitality REIT 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

Microlink Solutions and YTL Hospitality Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Microlink Solutions and YTL Hospitality

The main advantage of trading using opposite Microlink Solutions and YTL Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microlink Solutions position performs unexpectedly, YTL Hospitality 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 YTL Hospitality will offset losses from the drop in YTL Hospitality's long position.
The idea behind Microlink Solutions Bhd and YTL Hospitality REIT 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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