Correlation Between Lanka Milk and Lighthouse Hotel
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By analyzing existing cross correlation between Lanka Milk Foods and Lighthouse Hotel PLC, you can compare the effects of market volatilities on Lanka Milk and Lighthouse Hotel 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 Lighthouse Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lanka Milk and Lighthouse Hotel.
Diversification Opportunities for Lanka Milk and Lighthouse Hotel
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lanka and Lighthouse is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Lanka Milk Foods and Lighthouse Hotel PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lighthouse Hotel 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 Lighthouse Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lighthouse Hotel PLC has no effect on the direction of Lanka Milk i.e., Lanka Milk and Lighthouse Hotel go up and down completely randomly.
Pair Corralation between Lanka Milk and Lighthouse Hotel
Assuming the 90 days trading horizon Lanka Milk is expected to generate 1.7 times less return on investment than Lighthouse Hotel. But when comparing it to its historical volatility, Lanka Milk Foods is 1.51 times less risky than Lighthouse Hotel. It trades about 0.18 of its potential returns per unit of risk. Lighthouse Hotel PLC is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,870 in Lighthouse Hotel PLC on August 27, 2024 and sell it today you would earn a total of 430.00 from holding Lighthouse Hotel PLC or generate 8.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 89.47% |
| Values | Daily Returns |
Lanka Milk Foods vs. Lighthouse Hotel PLC
Performance |
| Timeline |
| Lanka Milk Foods |
| Lighthouse Hotel PLC |
Lanka Milk and Lighthouse Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lanka Milk and Lighthouse Hotel
The main advantage of trading using opposite Lanka Milk and Lighthouse Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lanka Milk position performs unexpectedly, Lighthouse Hotel 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 Lighthouse Hotel will offset losses from the drop in Lighthouse Hotel'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 |
| Lighthouse Hotel vs. Ceylon Guardian Investment | Lighthouse Hotel vs. Sri Lanka Telecom | Lighthouse Hotel vs. Ceylon Hotels | Lighthouse Hotel vs. Palm Garden Hotels |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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