Correlation Between Ceylon Tobacco and Sri Lanka
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By analyzing existing cross correlation between Ceylon Tobacco and Sri Lanka Telecom, you can compare the effects of market volatilities on Ceylon Tobacco and Sri Lanka 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 Tobacco with a short position of Sri Lanka. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceylon Tobacco and Sri Lanka.
Diversification Opportunities for Ceylon Tobacco and Sri Lanka
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ceylon and Sri is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ceylon Tobacco and Sri Lanka Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sri Lanka Telecom and Ceylon Tobacco 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 Tobacco are associated (or correlated) with Sri Lanka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sri Lanka Telecom has no effect on the direction of Ceylon Tobacco i.e., Ceylon Tobacco and Sri Lanka go up and down completely randomly.
Pair Corralation between Ceylon Tobacco and Sri Lanka
Assuming the 90 days trading horizon Ceylon Tobacco is expected to generate 0.57 times more return on investment than Sri Lanka. However, Ceylon Tobacco is 1.75 times less risky than Sri Lanka. It trades about 0.12 of its potential returns per unit of risk. Sri Lanka Telecom is currently generating about -0.08 per unit of risk. If you would invest 97,000 in Ceylon Tobacco on September 15, 2024 and sell it today you would earn a total of 35,000 from holding Ceylon Tobacco or generate 36.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.61% |
| Values | Daily Returns |
Ceylon Tobacco vs. Sri Lanka Telecom
Performance |
| Timeline |
| Ceylon Tobacco |
| Sri Lanka Telecom |
Ceylon Tobacco and Sri Lanka Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ceylon Tobacco and Sri Lanka
The main advantage of trading using opposite Ceylon Tobacco and Sri Lanka positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ceylon Tobacco position performs unexpectedly, Sri Lanka 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 Sri Lanka will offset losses from the drop in Sri Lanka's long position.| Ceylon Tobacco vs. Lanka Credit and | Ceylon Tobacco vs. VIDULLANKA PLC | Ceylon Tobacco vs. Carson Cumberbatch PLC | Ceylon Tobacco vs. Peoples Insurance PLC |
| Sri Lanka vs. PEOPLES LEASING FINANCE | Sri Lanka vs. Convenience Foods PLC | Sri Lanka vs. Keells Food Products | Sri Lanka vs. Ceylon Tobacco |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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