Correlation Between Lanka Milk and CEYLINCO INSURANCE
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By analyzing existing cross correlation between Lanka Milk Foods and CEYLINCO INSURANCE PLC, you can compare the effects of market volatilities on Lanka Milk and CEYLINCO INSURANCE 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 Lanka Milk with a short position of CEYLINCO INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lanka Milk and CEYLINCO INSURANCE.
Diversification Opportunities for Lanka Milk and CEYLINCO INSURANCE
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lanka and CEYLINCO is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lanka Milk Foods and CEYLINCO INSURANCE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEYLINCO INSURANCE PLC and Lanka Milk 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 Lanka Milk Foods are associated (or correlated) with CEYLINCO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEYLINCO INSURANCE PLC has no effect on the direction of Lanka Milk i.e., Lanka Milk and CEYLINCO INSURANCE go up and down completely randomly.
Pair Corralation between Lanka Milk and CEYLINCO INSURANCE
Assuming the 90 days trading horizon Lanka Milk Foods is expected to generate 3.8 times more return on investment than CEYLINCO INSURANCE. However, Lanka Milk is 3.8 times more volatile than CEYLINCO INSURANCE PLC. It trades about 0.01 of its potential returns per unit of risk. CEYLINCO INSURANCE PLC is currently generating about 0.01 per unit of risk. If you would invest 12,850 in Lanka Milk Foods on August 27, 2024 and sell it today you would lose (9,570) from holding Lanka Milk Foods or give up 74.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.44% |
| Values | Daily Returns |
Lanka Milk Foods vs. CEYLINCO INSURANCE PLC
Performance |
| Timeline |
| Lanka Milk Foods |
| CEYLINCO INSURANCE PLC |
Lanka Milk and CEYLINCO INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lanka Milk and CEYLINCO INSURANCE
The main advantage of trading using opposite Lanka Milk and CEYLINCO INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lanka Milk position performs unexpectedly, CEYLINCO INSURANCE 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 CEYLINCO INSURANCE will offset losses from the drop in CEYLINCO INSURANCE's long position.| Lanka Milk vs. BROWNS INVESTMENTS PLC | Lanka Milk vs. Distilleries Company of | Lanka Milk vs. Sri Lanka Telecom | Lanka Milk vs. Convenience Foods PLC |
| CEYLINCO INSURANCE vs. Sanasa Development Bank | CEYLINCO INSURANCE vs. Union Chemicals Lanka | CEYLINCO INSURANCE vs. Union Bank | CEYLINCO INSURANCE vs. Ceylon Guardian Investment |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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