Correlation Between Lanka Milk and Nations Trust
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By analyzing existing cross correlation between Lanka Milk Foods and Nations Trust Bank, you can compare the effects of market volatilities on Lanka Milk and Nations Trust 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 Nations Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lanka Milk and Nations Trust.
Diversification Opportunities for Lanka Milk and Nations Trust
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lanka and Nations is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Lanka Milk Foods and Nations Trust Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nations Trust Bank 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 Nations Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nations Trust Bank has no effect on the direction of Lanka Milk i.e., Lanka Milk and Nations Trust go up and down completely randomly.
Pair Corralation between Lanka Milk and Nations Trust
Assuming the 90 days trading horizon Lanka Milk is expected to generate 28.55 times less return on investment than Nations Trust. In addition to that, Lanka Milk is 1.35 times more volatile than Nations Trust Bank. It trades about 0.01 of its total potential returns per unit of risk. Nations Trust Bank is currently generating about 0.35 per unit of volatility. If you would invest 14,225 in Nations Trust Bank on September 13, 2024 and sell it today you would earn a total of 1,625 from holding Nations Trust Bank or generate 11.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lanka Milk Foods vs. Nations Trust Bank
Performance |
| Timeline |
| Lanka Milk Foods |
| Nations Trust Bank |
Lanka Milk and Nations Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lanka Milk and Nations Trust
The main advantage of trading using opposite Lanka Milk and Nations Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lanka Milk position performs unexpectedly, Nations Trust 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 Nations Trust will offset losses from the drop in Nations Trust's long position.| Lanka Milk vs. Jat Holdings PLC | Lanka Milk vs. Lanka Credit and | Lanka Milk vs. VIDULLANKA PLC | Lanka Milk vs. Carson Cumberbatch PLC |
| Nations Trust vs. Tal Lanka Hotels | Nations Trust vs. SERENDIB HOTELS PLC | Nations Trust vs. BROWNS INVESTMENTS PLC | Nations Trust vs. Eden Hotel Lanka |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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