Correlation Between Impiana Hotels and Digistar Bhd

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

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

Diversification Opportunities for Impiana Hotels and Digistar Bhd

0.07

Correlation Coefficient

Impiana Hotels  Digistar Bhd

Significant diversification

The 3 months correlation between Impiana and Digistar is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Impiana Hotels Bhd and Digistar Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digistar Bhd and Impiana Hotels 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 Impiana Hotels Bhd are associated (or correlated) with Digistar Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digistar Bhd has no effect on the direction of Impiana Hotels i.e., Impiana Hotels and Digistar Bhd go up and down completely randomly.

Pair Corralation between Impiana Hotels and Digistar Bhd

Assuming the 90 days trading horizon Impiana Hotels is expected to generate 2.04 times less return on investment than Digistar Bhd. But when comparing it to its historical volatility, Impiana Hotels Bhd is 1.58 times less risky than Digistar Bhd. It trades about 0.01 of its potential returns per unit of risk. Digistar Bhd is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6.50  in Digistar Bhd on September 15, 2024 and sell it today you would lose (1.00) from holding Digistar Bhd or give up 15.38% of portfolio value over 90 days.

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

Impiana Hotels Bhd  vs.  Digistar Bhd

Impiana Hotels Bhd

Risk-Adjusted Performance

1 of 100

Weak

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

Digistar Bhd

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Impiana Hotels and Digistar Bhd

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

The idea behind Impiana Hotels Bhd and Digistar Bhd 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.