Correlation Between Peoples Insurance and Ceylon Tobacco
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By analyzing existing cross correlation between Peoples Insurance PLC and Ceylon Tobacco, you can compare the effects of market volatilities on Peoples Insurance and Ceylon Tobacco 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 Peoples Insurance with a short position of Ceylon Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peoples Insurance and Ceylon Tobacco.
Diversification Opportunities for Peoples Insurance and Ceylon Tobacco
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Peoples and Ceylon is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Peoples Insurance PLC and Ceylon Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceylon Tobacco and Peoples Insurance 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 Peoples Insurance PLC are associated (or correlated) with Ceylon Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceylon Tobacco has no effect on the direction of Peoples Insurance i.e., Peoples Insurance and Ceylon Tobacco go up and down completely randomly.
Pair Corralation between Peoples Insurance and Ceylon Tobacco
Assuming the 90 days trading horizon Peoples Insurance is expected to generate 1.57 times less return on investment than Ceylon Tobacco. In addition to that, Peoples Insurance is 1.75 times more volatile than Ceylon Tobacco. It trades about 0.06 of its total potential returns per unit of risk. Ceylon Tobacco is currently generating about 0.16 per unit of volatility. If you would invest 116,350 in Ceylon Tobacco on September 3, 2024 and sell it today you would earn a total of 11,150 from holding Ceylon Tobacco or generate 9.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Peoples Insurance PLC vs. Ceylon Tobacco
Performance |
| Timeline |
| Peoples Insurance PLC |
| Ceylon Tobacco |
Peoples Insurance and Ceylon Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peoples Insurance and Ceylon Tobacco
The main advantage of trading using opposite Peoples Insurance and Ceylon Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peoples Insurance position performs unexpectedly, Ceylon Tobacco 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 Ceylon Tobacco will offset losses from the drop in Ceylon Tobacco's long position.| Peoples Insurance vs. CEYLON HOSPITALS PLC | Peoples Insurance vs. Carson Cumberbatch PLC | Peoples Insurance vs. Distilleries Company of | Peoples Insurance vs. Citrus Leisure PLC |
| Ceylon Tobacco vs. Lanka Credit and | Ceylon Tobacco vs. VIDULLANKA PLC | Ceylon Tobacco vs. Carson Cumberbatch PLC | Ceylon Tobacco vs. Peoples Insurance PLC |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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