Correlation Between Ceylon Hotels and Ceylon Tobacco
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By analyzing existing cross correlation between Ceylon Hotels and Ceylon Tobacco, you can compare the effects of market volatilities on Ceylon Hotels and Ceylon Tobacco 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 Ceylon Hotels with a short position of Ceylon Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceylon Hotels and Ceylon Tobacco.
Diversification Opportunities for Ceylon Hotels and Ceylon Tobacco
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ceylon and Ceylon is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ceylon Hotels and Ceylon Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceylon Tobacco and Ceylon 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 Ceylon Hotels are associated (or correlated) with Ceylon Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceylon Tobacco has no effect on the direction of Ceylon Hotels i.e., Ceylon Hotels and Ceylon Tobacco go up and down completely randomly.
Pair Corralation between Ceylon Hotels and Ceylon Tobacco
Assuming the 90 days trading horizon Ceylon Hotels is expected to generate 1.93 times less return on investment than Ceylon Tobacco. In addition to that, Ceylon Hotels is 2.08 times more volatile than Ceylon Tobacco. It trades about 0.03 of its total potential returns per unit of risk. Ceylon Tobacco is currently generating about 0.13 per unit of volatility. If you would invest 79,550 in Ceylon Tobacco on August 31, 2024 and sell it today you would earn a total of 47,950 from holding Ceylon Tobacco or generate 60.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.15% |
| Values | Daily Returns |
Ceylon Hotels vs. Ceylon Tobacco
Performance |
| Timeline |
| Ceylon Hotels |
| Ceylon Tobacco |
Ceylon Hotels and Ceylon Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ceylon Hotels and Ceylon Tobacco
The main advantage of trading using opposite Ceylon Hotels and Ceylon Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ceylon Hotels position performs unexpectedly, Ceylon Tobacco 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 Ceylon Tobacco will offset losses from the drop in Ceylon Tobacco's long position.| Ceylon Hotels vs. HNB Finance | Ceylon Hotels vs. Prime Lands Residencies | Ceylon Hotels vs. Jat Holdings PLC | Ceylon Hotels vs. E M L |
| Ceylon Tobacco vs. Arpico Insurance | Ceylon Tobacco vs. Ceylinco Insurance PLC | Ceylon Tobacco vs. Janashakthi Insurance | Ceylon Tobacco vs. Softlogic Life Insurance |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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