Correlation Between Lanka Milk and John Keells
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By analyzing existing cross correlation between Lanka Milk Foods and John Keells Hotels, you can compare the effects of market volatilities on Lanka Milk and John Keells 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 John Keells. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lanka Milk and John Keells.
Diversification Opportunities for Lanka Milk and John Keells
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lanka and John is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Lanka Milk Foods and John Keells Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Keells Hotels 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 John Keells. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Keells Hotels has no effect on the direction of Lanka Milk i.e., Lanka Milk and John Keells go up and down completely randomly.
Pair Corralation between Lanka Milk and John Keells
Assuming the 90 days trading horizon Lanka Milk Foods is expected to generate about the same return on investment as John Keells Hotels. However, Lanka Milk is 2.94 times more volatile than John Keells Hotels. It trades about 0.01 of its potential returns per unit of risk. John Keells Hotels is currently producing about 0.02 per unit of risk. If you would invest 1,650 in John Keells Hotels on August 28, 2024 and sell it today you would earn a total of 200.00 from holding John Keells Hotels or generate 12.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.68% |
| Values | Daily Returns |
Lanka Milk Foods vs. John Keells Hotels
Performance |
| Timeline |
| Lanka Milk Foods |
| John Keells Hotels |
Lanka Milk and John Keells Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lanka Milk and John Keells
The main advantage of trading using opposite Lanka Milk and John Keells positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lanka Milk position performs unexpectedly, John Keells 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 John Keells will offset losses from the drop in John Keells' long position.| Lanka Milk vs. Lighthouse Hotel PLC | Lanka Milk vs. Amaya Leisure PLC | Lanka Milk vs. Kandy Hotels | Lanka Milk vs. Dolphin Hotels PLC |
| John Keells vs. Kandy Hotels | John Keells vs. Mahaweli Reach Hotel | John Keells vs. Renuka Agri Foods | John Keells vs. Distilleries Company of |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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