Correlation Between Lanka Realty and Alliance Finance
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By analyzing existing cross correlation between Lanka Realty Investments and Alliance Finance, you can compare the effects of market volatilities on Lanka Realty and Alliance Finance 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 Lanka Realty with a short position of Alliance Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lanka Realty and Alliance Finance.
Diversification Opportunities for Lanka Realty and Alliance Finance
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lanka and Alliance is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lanka Realty Investments and Alliance Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Finance and Lanka Realty 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 Lanka Realty Investments are associated (or correlated) with Alliance Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Finance has no effect on the direction of Lanka Realty i.e., Lanka Realty and Alliance Finance go up and down completely randomly.
Pair Corralation between Lanka Realty and Alliance Finance
Assuming the 90 days trading horizon Lanka Realty Investments is expected to under-perform the Alliance Finance. But the stock apears to be less risky and, when comparing its historical volatility, Lanka Realty Investments is 1.1 times less risky than Alliance Finance. The stock trades about -0.15 of its potential returns per unit of risk. The Alliance Finance is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 11,700 in Alliance Finance on August 27, 2024 and sell it today you would earn a total of 800.00 from holding Alliance Finance or generate 6.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Lanka Realty Investments vs. Alliance Finance
Performance |
| Timeline |
| Lanka Realty Investments |
| Alliance Finance |
Lanka Realty and Alliance Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lanka Realty and Alliance Finance
The main advantage of trading using opposite Lanka Realty and Alliance Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lanka Realty position performs unexpectedly, Alliance Finance 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 Alliance Finance will offset losses from the drop in Alliance Finance's long position.| Lanka Realty vs. PEOPLES LEASING FINANCE | Lanka Realty vs. Janashakthi Insurance | Lanka Realty vs. Ceylinco Insurance PLC | Lanka Realty vs. National Development Bank |
| Alliance Finance vs. RENUKA FOODS PLC | Alliance Finance vs. Ceylon Hotels | Alliance Finance vs. Distilleries Company of | Alliance Finance vs. Lanka Realty Investments |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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