Correlation Between Kandy Hotels and Sigiriya Village
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By analyzing existing cross correlation between Kandy Hotels and Sigiriya Village Hotels, you can compare the effects of market volatilities on Kandy Hotels and Sigiriya Village 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 Sigiriya Village. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kandy Hotels and Sigiriya Village.
Diversification Opportunities for Kandy Hotels and Sigiriya Village
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kandy and Sigiriya is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Kandy Hotels and Sigiriya Village Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sigiriya Village Hotels 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 Sigiriya Village. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sigiriya Village Hotels has no effect on the direction of Kandy Hotels i.e., Kandy Hotels and Sigiriya Village go up and down completely randomly.
Pair Corralation between Kandy Hotels and Sigiriya Village
Assuming the 90 days trading horizon Kandy Hotels is expected to generate 1.32 times more return on investment than Sigiriya Village. However, Kandy Hotels is 1.32 times more volatile than Sigiriya Village Hotels. It trades about 0.41 of its potential returns per unit of risk. Sigiriya Village Hotels is currently generating about 0.35 per unit of risk. If you would invest 800.00 in Kandy Hotels on September 1, 2024 and sell it today you would earn a total of 310.00 from holding Kandy Hotels or generate 38.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kandy Hotels vs. Sigiriya Village Hotels
Performance |
| Timeline |
| Kandy Hotels |
| Sigiriya Village Hotels |
Kandy Hotels and Sigiriya Village Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kandy Hotels and Sigiriya Village
The main advantage of trading using opposite Kandy Hotels and Sigiriya Village positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kandy Hotels position performs unexpectedly, Sigiriya Village 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 Sigiriya Village will offset losses from the drop in Sigiriya Village's long position.| Kandy Hotels vs. Ceylon Hotels | Kandy Hotels vs. Sigiriya Village Hotels | Kandy Hotels vs. Lanka Realty Investments | Kandy Hotels vs. Sri Lanka Telecom |
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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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