Correlation Between YTL Hospitality and Farm Price

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

Diversification Opportunities for YTL Hospitality and Farm Price

0.43

Correlation Coefficient

YTL Hospitality  Farm Price

Very weak diversification

The 3 months correlation between YTL and Farm is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding YTL Hospitality REIT and Farm Price Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farm Price Holdings 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 Farm Price. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farm Price Holdings has no effect on the direction of YTL Hospitality i.e., YTL Hospitality and Farm Price go up and down completely randomly.

Pair Corralation between YTL Hospitality and Farm Price

Assuming the 90 days trading horizon YTL Hospitality REIT is expected to generate 0.51 times more return on investment than Farm Price. However, YTL Hospitality REIT is 1.97 times less risky than Farm Price. It trades about -0.01 of its potential returns per unit of risk. Farm Price Holdings is currently generating about -0.1 per unit of risk. If you would invest  120.00  in YTL Hospitality REIT on September 26, 2024 and sell it today you would lose (1.00) from holding YTL Hospitality REIT or give up 0.83% 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.  Farm Price Holdings

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.

Farm Price Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Farm Price Holdings 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.

Pair Trading with YTL Hospitality and Farm Price

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

The idea behind YTL Hospitality REIT and Farm Price Holdings 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.