Correlation Between E M and Ceylon Hotels
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By analyzing existing cross correlation between E M L and Ceylon Hotels, you can compare the effects of market volatilities on E M 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 E M with a short position of Ceylon Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of E M and Ceylon Hotels.
Diversification Opportunities for E M and Ceylon Hotels
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EMLN0000 and Ceylon is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding E M L and Ceylon Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceylon Hotels and E M 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 E M L 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 E M i.e., E M and Ceylon Hotels go up and down completely randomly.
Pair Corralation between E M and Ceylon Hotels
Assuming the 90 days trading horizon E M L is expected to under-perform the Ceylon Hotels. In addition to that, E M is 1.26 times more volatile than Ceylon Hotels. It trades about 0.0 of its total potential returns per unit of risk. Ceylon Hotels is currently generating about 0.02 per unit of volatility. If you would invest 1,930 in Ceylon Hotels on September 2, 2024 and sell it today you would earn a total of 270.00 from holding Ceylon Hotels or generate 13.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.16% |
| Values | Daily Returns |
E M L vs. Ceylon Hotels
Performance |
| Timeline |
| E M L |
| Ceylon Hotels |
E M and Ceylon Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E M and Ceylon Hotels
The main advantage of trading using opposite E M and Ceylon Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E M 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.| E M vs. Union Chemicals Lanka | E M vs. CEYLINCO INSURANCE PLC | E M vs. HVA Foods PLC | E M vs. Ceylon Hospitals PLC |
| Ceylon Hotels vs. Prime Lands Residencies | Ceylon Hotels vs. VIDULLANKA PLC | Ceylon Hotels vs. EX PACK RUGATED CARTONS |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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