Correlation Between Kandy Hotels and Lanka Milk
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By analyzing existing cross correlation between Kandy Hotels and Lanka Milk Foods, you can compare the effects of market volatilities on Kandy Hotels 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 Kandy Hotels with a short position of Lanka Milk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kandy Hotels and Lanka Milk.
Diversification Opportunities for Kandy Hotels and Lanka Milk
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kandy and Lanka is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Kandy Hotels 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 Kandy Hotels 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 Kandy Hotels 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 Kandy Hotels i.e., Kandy Hotels and Lanka Milk go up and down completely randomly.
Pair Corralation between Kandy Hotels and Lanka Milk
Assuming the 90 days trading horizon Kandy Hotels is expected to generate 1.1 times more return on investment than Lanka Milk. However, Kandy Hotels is 1.1 times more volatile than Lanka Milk Foods. It trades about 0.27 of its potential returns per unit of risk. Lanka Milk Foods is currently generating about 0.15 per unit of risk. If you would invest 820.00 in Kandy Hotels on August 28, 2024 and sell it today you would earn a total of 90.00 from holding Kandy Hotels or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kandy Hotels vs. Lanka Milk Foods
Performance |
| Timeline |
| Kandy Hotels |
| Lanka Milk Foods |
Kandy Hotels and Lanka Milk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kandy Hotels and Lanka Milk
The main advantage of trading using opposite Kandy Hotels and Lanka Milk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kandy Hotels 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.| Kandy Hotels vs. Ceylinco Insurance PLC | Kandy Hotels vs. COMMERCIAL BANK OF | Kandy Hotels vs. Arpico Insurance | Kandy Hotels vs. Pan Asia Banking |
| Lanka Milk vs. Lighthouse Hotel PLC | Lanka Milk vs. Amaya Leisure PLC | Lanka Milk vs. Kandy Hotels | Lanka Milk vs. Dolphin Hotels PLC |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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