Correlation Between ACL Plastics and Elpitiya Plantations
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By analyzing existing cross correlation between ACL Plastics PLC and Elpitiya Plantations PLC, you can compare the effects of market volatilities on ACL Plastics and Elpitiya Plantations 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 ACL Plastics with a short position of Elpitiya Plantations. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACL Plastics and Elpitiya Plantations.
Diversification Opportunities for ACL Plastics and Elpitiya Plantations
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ACL and Elpitiya is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ACL Plastics PLC and Elpitiya Plantations PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elpitiya Plantations PLC and ACL Plastics 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 ACL Plastics PLC are associated (or correlated) with Elpitiya Plantations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elpitiya Plantations PLC has no effect on the direction of ACL Plastics i.e., ACL Plastics and Elpitiya Plantations go up and down completely randomly.
Pair Corralation between ACL Plastics and Elpitiya Plantations
Assuming the 90 days trading horizon ACL Plastics is expected to generate 1.46 times less return on investment than Elpitiya Plantations. But when comparing it to its historical volatility, ACL Plastics PLC is 1.06 times less risky than Elpitiya Plantations. It trades about 0.02 of its potential returns per unit of risk. Elpitiya Plantations PLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 8,900 in Elpitiya Plantations PLC on September 2, 2024 and sell it today you would earn a total of 1,950 from holding Elpitiya Plantations PLC or generate 21.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.32% |
| Values | Daily Returns |
ACL Plastics PLC vs. Elpitiya Plantations PLC
Performance |
| Timeline |
| ACL Plastics PLC |
| Elpitiya Plantations PLC |
ACL Plastics and Elpitiya Plantations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACL Plastics and Elpitiya Plantations
The main advantage of trading using opposite ACL Plastics and Elpitiya Plantations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACL Plastics position performs unexpectedly, Elpitiya Plantations 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 Elpitiya Plantations will offset losses from the drop in Elpitiya Plantations' long position.| ACL Plastics vs. Lanka Realty Investments | ACL Plastics vs. Aitken Spence Hotel | ACL Plastics vs. Convenience Foods PLC | ACL Plastics vs. BROWNS INVESTMENTS PLC |
| Elpitiya Plantations vs. HVA Foods PLC | Elpitiya Plantations vs. Convenience Foods PLC | Elpitiya Plantations vs. Aitken Spence Hotel | Elpitiya Plantations vs. Ceylon Beverage Holdings |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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