Correlation Between SERENDIB HOTELS and Sri Lanka
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By analyzing existing cross correlation between SERENDIB HOTELS PLC and Sri Lanka Telecom, you can compare the effects of market volatilities on SERENDIB HOTELS and Sri Lanka 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 SERENDIB HOTELS with a short position of Sri Lanka. Check out your portfolio center. Please also check ongoing floating volatility patterns of SERENDIB HOTELS and Sri Lanka.
Diversification Opportunities for SERENDIB HOTELS and Sri Lanka
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SERENDIB and Sri is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SERENDIB HOTELS PLC and Sri Lanka Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sri Lanka Telecom and SERENDIB HOTELS 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 SERENDIB HOTELS PLC are associated (or correlated) with Sri Lanka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sri Lanka Telecom has no effect on the direction of SERENDIB HOTELS i.e., SERENDIB HOTELS and Sri Lanka go up and down completely randomly.
Pair Corralation between SERENDIB HOTELS and Sri Lanka
Assuming the 90 days trading horizon SERENDIB HOTELS PLC is expected to generate 2.4 times more return on investment than Sri Lanka. However, SERENDIB HOTELS is 2.4 times more volatile than Sri Lanka Telecom. It trades about 0.43 of its potential returns per unit of risk. Sri Lanka Telecom is currently generating about -0.05 per unit of risk. If you would invest 1,000.00 in SERENDIB HOTELS PLC on August 27, 2024 and sell it today you would earn a total of 170.00 from holding SERENDIB HOTELS PLC or generate 17.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SERENDIB HOTELS PLC vs. Sri Lanka Telecom
Performance |
| Timeline |
| SERENDIB HOTELS PLC |
| Sri Lanka Telecom |
SERENDIB HOTELS and Sri Lanka Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SERENDIB HOTELS and Sri Lanka
The main advantage of trading using opposite SERENDIB HOTELS and Sri Lanka positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SERENDIB HOTELS position performs unexpectedly, Sri Lanka 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 Sri Lanka will offset losses from the drop in Sri Lanka's long position.| SERENDIB HOTELS vs. Ceylinco Insurance PLC | SERENDIB HOTELS vs. Hatton National Bank | SERENDIB HOTELS vs. Pan Asia Banking | SERENDIB HOTELS vs. Renuka Agri Foods |
| Sri Lanka vs. Browns Beach Hotels | Sri Lanka vs. Mahaweli Reach Hotel | Sri Lanka vs. CEYLINCO INSURANCE PLC | Sri Lanka vs. Lanka Realty Investments |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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