Correlation Between Central Industries and Ceylon Hotels
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By analyzing existing cross correlation between Central Industries PLC and Ceylon Hotels, you can compare the effects of market volatilities on Central Industries and Ceylon Hotels 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 Central Industries with a short position of Ceylon Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Industries and Ceylon Hotels.
Diversification Opportunities for Central Industries and Ceylon Hotels
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Central and Ceylon is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Central Industries PLC and Ceylon Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceylon Hotels and Central Industries 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 Central Industries PLC are associated (or correlated) with Ceylon Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceylon Hotels has no effect on the direction of Central Industries i.e., Central Industries and Ceylon Hotels go up and down completely randomly.
Pair Corralation between Central Industries and Ceylon Hotels
Assuming the 90 days trading horizon Central Industries PLC is expected to generate 0.83 times more return on investment than Ceylon Hotels. However, Central Industries PLC is 1.21 times less risky than Ceylon Hotels. It trades about 0.06 of its potential returns per unit of risk. Ceylon Hotels is currently generating about 0.03 per unit of risk. If you would invest 9,570 in Central Industries PLC on December 4, 2024 and sell it today you would earn a total of 5,480 from holding Central Industries PLC or generate 57.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.57% |
| Values | Daily Returns |
Central Industries PLC vs. Ceylon Hotels
Performance |
| Timeline |
| Central Industries PLC |
| Ceylon Hotels |
Central Industries and Ceylon Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Industries and Ceylon Hotels
The main advantage of trading using opposite Central Industries and Ceylon Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Industries position performs unexpectedly, Ceylon Hotels 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 Hotels will offset losses from the drop in Ceylon Hotels' long position.| Central Industries vs. RENUKA FOODS PLC | Central Industries vs. Convenience Foods PLC | Central Industries vs. Ceylinco Insurance PLC | Central Industries vs. HVA Foods PLC |
| Ceylon Hotels vs. Union Chemicals Lanka | Ceylon Hotels vs. CEYLON HOSPITALS PLC | Ceylon Hotels vs. Seylan Bank PLC | Ceylon Hotels vs. Janashakthi 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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