Correlation Between E M and Lanka Credit
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By analyzing existing cross correlation between E M L and Lanka Credit and, you can compare the effects of market volatilities on E M and Lanka Credit 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 Lanka Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of E M and Lanka Credit.
Diversification Opportunities for E M and Lanka Credit
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EMLN0000 and Lanka is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding E M L and Lanka Credit and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lanka Credit 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 Lanka Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lanka Credit has no effect on the direction of E M i.e., E M and Lanka Credit go up and down completely randomly.
Pair Corralation between E M and Lanka Credit
Assuming the 90 days trading horizon E M L is expected to generate 1.1 times more return on investment than Lanka Credit. However, E M is 1.1 times more volatile than Lanka Credit and. It trades about -0.09 of its potential returns per unit of risk. Lanka Credit and is currently generating about -0.25 per unit of risk. If you would invest 350.00 in E M L on August 27, 2024 and sell it today you would lose (20.00) from holding E M L or give up 5.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
E M L vs. Lanka Credit and
Performance |
| Timeline |
| E M L |
| Lanka Credit |
E M and Lanka Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E M and Lanka Credit
The main advantage of trading using opposite E M and Lanka Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E M position performs unexpectedly, Lanka Credit 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 Lanka Credit will offset losses from the drop in Lanka Credit's long position.The idea behind E M L and Lanka Credit and pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lanka Credit vs. Sigiriya Village Hotels | Lanka Credit vs. Union Chemicals Lanka | Lanka Credit vs. Sri Lanka Telecom | Lanka Credit vs. Distilleries Company of |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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