Correlation Between Hotel Sigiriya and Lanka Milk
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By analyzing existing cross correlation between Hotel Sigiriya PLC and Lanka Milk Foods, you can compare the effects of market volatilities on Hotel Sigiriya and Lanka Milk 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 Hotel Sigiriya with a short position of Lanka Milk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Sigiriya and Lanka Milk.
Diversification Opportunities for Hotel Sigiriya and Lanka Milk
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hotel and Lanka is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Sigiriya PLC and Lanka Milk Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lanka Milk Foods and Hotel Sigiriya 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 Hotel Sigiriya PLC are associated (or correlated) with Lanka Milk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lanka Milk Foods has no effect on the direction of Hotel Sigiriya i.e., Hotel Sigiriya and Lanka Milk go up and down completely randomly.
Pair Corralation between Hotel Sigiriya and Lanka Milk
Assuming the 90 days trading horizon Hotel Sigiriya is expected to generate 2.2 times less return on investment than Lanka Milk. In addition to that, Hotel Sigiriya is 1.14 times more volatile than Lanka Milk Foods. It trades about 0.04 of its total potential returns per unit of risk. Lanka Milk Foods is currently generating about 0.1 per unit of volatility. If you would invest 2,390 in Lanka Milk Foods on August 27, 2024 and sell it today you would earn a total of 890.00 from holding Lanka Milk Foods or generate 37.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.86% |
| Values | Daily Returns |
Hotel Sigiriya PLC vs. Lanka Milk Foods
Performance |
| Timeline |
| Hotel Sigiriya PLC |
| Lanka Milk Foods |
Hotel Sigiriya and Lanka Milk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Sigiriya and Lanka Milk
The main advantage of trading using opposite Hotel Sigiriya and Lanka Milk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Sigiriya position performs unexpectedly, Lanka Milk 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 Milk will offset losses from the drop in Lanka Milk's long position.| Hotel Sigiriya vs. Sigiriya Village Hotels | Hotel Sigiriya vs. Browns Beach Hotels | Hotel Sigiriya vs. Ceylinco Insurance PLC | Hotel Sigiriya vs. Trans Asia Hotels |
| Lanka Milk vs. Convenience Foods PLC | Lanka Milk vs. RENUKA FOODS PLC | Lanka Milk vs. Seylan Bank PLC | Lanka Milk 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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