Correlation Between YTL Hospitality and Senheng New

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

Diversification Opportunities for YTL Hospitality and Senheng New

-0.22

Correlation Coefficient

YTL Hospitality  Senheng New

Very good diversification

The 3 months correlation between YTL and Senheng is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding YTL Hospitality REIT and Senheng New Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senheng New Retail 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 Senheng New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senheng New Retail has no effect on the direction of YTL Hospitality i.e., YTL Hospitality and Senheng New go up and down completely randomly.

Pair Corralation between YTL Hospitality and Senheng New

Assuming the 90 days trading horizon YTL Hospitality REIT is expected to under-perform the Senheng New. But the stock apears to be less risky and, when comparing its historical volatility, YTL Hospitality REIT is 2.6 times less risky than Senheng New. The stock trades about -0.04 of its potential returns per unit of risk. The Senheng New Retail is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Senheng New Retail on September 27, 2024 and sell it today you would earn a total of  3.00  from holding Senheng New Retail or generate 12.0% return on investment over 90 days.

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

YTL Hospitality REIT  vs.  Senheng New Retail

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.

Senheng New Retail

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Senheng New Retail are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Senheng New disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YTL Hospitality and Senheng New

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

The idea behind YTL Hospitality REIT and Senheng New Retail 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.