Correlation Between Lanka Milk and Nuwara Eliya
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By analyzing existing cross correlation between Lanka Milk Foods and Nuwara Eliya Hotels, you can compare the effects of market volatilities on Lanka Milk and Nuwara Eliya 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 Nuwara Eliya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lanka Milk and Nuwara Eliya.
Diversification Opportunities for Lanka Milk and Nuwara Eliya
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lanka and Nuwara is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lanka Milk Foods and Nuwara Eliya Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuwara Eliya 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 Nuwara Eliya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuwara Eliya Hotels has no effect on the direction of Lanka Milk i.e., Lanka Milk and Nuwara Eliya go up and down completely randomly.
Pair Corralation between Lanka Milk and Nuwara Eliya
Assuming the 90 days trading horizon Lanka Milk is expected to generate 5.46 times less return on investment than Nuwara Eliya. But when comparing it to its historical volatility, Lanka Milk Foods is 2.98 times less risky than Nuwara Eliya. It trades about 0.15 of its potential returns per unit of risk. Nuwara Eliya Hotels is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 196,000 in Nuwara Eliya Hotels on August 30, 2024 and sell it today you would earn a total of 37,475 from holding Nuwara Eliya Hotels or generate 19.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 65.0% |
| Values | Daily Returns |
Lanka Milk Foods vs. Nuwara Eliya Hotels
Performance |
| Timeline |
| Lanka Milk Foods |
| Nuwara Eliya Hotels |
Lanka Milk and Nuwara Eliya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lanka Milk and Nuwara Eliya
The main advantage of trading using opposite Lanka Milk and Nuwara Eliya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lanka Milk position performs unexpectedly, Nuwara Eliya 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 Nuwara Eliya will offset losses from the drop in Nuwara Eliya's long position.| Lanka Milk vs. Browns Beach Hotels | Lanka Milk vs. Ceylon Hotels | Lanka Milk vs. Hotel Sigiriya PLC | Lanka Milk vs. Tal Lanka Hotels |
| Nuwara Eliya vs. EX PACK RUGATED CARTONS | Nuwara Eliya vs. PANASIAN POWER PLC | Nuwara Eliya vs. Distilleries Company of | Nuwara Eliya 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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