Correlation Between Kandy Hotels and Tal Lanka
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By analyzing existing cross correlation between Kandy Hotels and Tal Lanka Hotels, you can compare the effects of market volatilities on Kandy Hotels and Tal Lanka 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 Tal Lanka. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kandy Hotels and Tal Lanka.
Diversification Opportunities for Kandy Hotels and Tal Lanka
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kandy and Tal is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Kandy Hotels and Tal Lanka Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tal Lanka 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 Tal Lanka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tal Lanka Hotels has no effect on the direction of Kandy Hotels i.e., Kandy Hotels and Tal Lanka go up and down completely randomly.
Pair Corralation between Kandy Hotels and Tal Lanka
Assuming the 90 days trading horizon Kandy Hotels is expected to generate 1.02 times less return on investment than Tal Lanka. In addition to that, Kandy Hotels is 1.07 times more volatile than Tal Lanka Hotels. It trades about 0.18 of its total potential returns per unit of risk. Tal Lanka Hotels is currently generating about 0.2 per unit of volatility. If you would invest 1,850 in Tal Lanka Hotels on August 28, 2024 and sell it today you would earn a total of 140.00 from holding Tal Lanka Hotels or generate 7.57% 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. Tal Lanka Hotels
Performance |
| Timeline |
| Kandy Hotels |
| Tal Lanka Hotels |
Kandy Hotels and Tal Lanka Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kandy Hotels and Tal Lanka
The main advantage of trading using opposite Kandy Hotels and Tal Lanka positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kandy Hotels position performs unexpectedly, Tal Lanka 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 Tal Lanka will offset losses from the drop in Tal Lanka's long position.| Kandy Hotels vs. COMMERCIAL BANK OF | Kandy Hotels vs. Convenience Foods PLC | Kandy Hotels vs. Sampath Bank PLC | Kandy Hotels vs. HVA Foods PLC |
| Tal Lanka vs. BROWNS INVESTMENTS PLC | Tal Lanka vs. Tangerine Beach Hotels | Tal Lanka vs. Ceylon Guardian Investment | Tal Lanka vs. Lanka Realty Investments |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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