Correlation Between Lanka Milk and Renuka Agri
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By analyzing existing cross correlation between Lanka Milk Foods and Renuka Agri Foods, you can compare the effects of market volatilities on Lanka Milk and Renuka Agri 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 Renuka Agri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lanka Milk and Renuka Agri.
Diversification Opportunities for Lanka Milk and Renuka Agri
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lanka and Renuka is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lanka Milk Foods and Renuka Agri Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renuka Agri Foods 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 Renuka Agri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renuka Agri Foods has no effect on the direction of Lanka Milk i.e., Lanka Milk and Renuka Agri go up and down completely randomly.
Pair Corralation between Lanka Milk and Renuka Agri
Assuming the 90 days trading horizon Lanka Milk Foods is expected to generate 0.81 times more return on investment than Renuka Agri. However, Lanka Milk Foods is 1.24 times less risky than Renuka Agri. It trades about 0.08 of its potential returns per unit of risk. Renuka Agri Foods is currently generating about -0.06 per unit of risk. If you would invest 3,100 in Lanka Milk Foods on August 31, 2024 and sell it today you would earn a total of 80.00 from holding Lanka Milk Foods or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lanka Milk Foods vs. Renuka Agri Foods
Performance |
| Timeline |
| Lanka Milk Foods |
| Renuka Agri Foods |
Lanka Milk and Renuka Agri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lanka Milk and Renuka Agri
The main advantage of trading using opposite Lanka Milk and Renuka Agri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lanka Milk position performs unexpectedly, Renuka Agri 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 Renuka Agri will offset losses from the drop in Renuka Agri's long position.| Lanka Milk vs. Tal Lanka Hotels | Lanka Milk vs. Pegasus Hotels of | Lanka Milk vs. Tangerine Beach Hotels | Lanka Milk vs. Renuka Agri Foods |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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