Correlation Between EX PACK and Ceylinco Insurance

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Can any of the company-specific risk be diversified away by investing in both EX PACK and Ceylinco Insurance at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining EX PACK and Ceylinco Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EX PACK RUGATED CARTONS and Ceylinco Insurance PLC, you can compare the effects of market volatilities on EX PACK and Ceylinco Insurance 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 EX PACK with a short position of Ceylinco Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of EX PACK and Ceylinco Insurance.

Diversification Opportunities for EX PACK and Ceylinco Insurance

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between PACKN0000 and Ceylinco is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding EX PACK RUGATED CARTONS and Ceylinco Insurance PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceylinco Insurance PLC and EX PACK 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 EX PACK RUGATED CARTONS are associated (or correlated) with Ceylinco Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceylinco Insurance PLC has no effect on the direction of EX PACK i.e., EX PACK and Ceylinco Insurance go up and down completely randomly.

Pair Corralation between EX PACK and Ceylinco Insurance

Assuming the 90 days trading horizon EX PACK is expected to generate 1.3 times less return on investment than Ceylinco Insurance. In addition to that, EX PACK is 2.03 times more volatile than Ceylinco Insurance PLC. It trades about 0.11 of its total potential returns per unit of risk. Ceylinco Insurance PLC is currently generating about 0.28 per unit of volatility. If you would invest  250,000  in Ceylinco Insurance PLC on September 2, 2024 and sell it today you would earn a total of  4,775  from holding Ceylinco Insurance PLC or generate 1.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy65.0%
ValuesDaily Returns

EX PACK RUGATED CARTONS  vs.  Ceylinco Insurance PLC

 Performance 
       Timeline  
EX PACK RUGATED 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in EX PACK RUGATED CARTONS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EX PACK may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Ceylinco Insurance PLC 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Ceylinco Insurance PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ceylinco Insurance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

EX PACK and Ceylinco Insurance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with EX PACK and Ceylinco Insurance

The main advantage of trading using opposite EX PACK and Ceylinco Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EX PACK position performs unexpectedly, Ceylinco Insurance 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 Ceylinco Insurance will offset losses from the drop in Ceylinco Insurance's long position.
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The idea behind EX PACK RUGATED CARTONS and Ceylinco Insurance PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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