Correlation Between Sri Lanka and ACL Plastics
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By analyzing existing cross correlation between Sri Lanka Telecom and ACL Plastics PLC, you can compare the effects of market volatilities on Sri Lanka and ACL Plastics 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 Sri Lanka with a short position of ACL Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sri Lanka and ACL Plastics.
Diversification Opportunities for Sri Lanka and ACL Plastics
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sri and ACL is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Sri Lanka Telecom and ACL Plastics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACL Plastics PLC and Sri Lanka 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 Sri Lanka Telecom are associated (or correlated) with ACL Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACL Plastics PLC has no effect on the direction of Sri Lanka i.e., Sri Lanka and ACL Plastics go up and down completely randomly.
Pair Corralation between Sri Lanka and ACL Plastics
Assuming the 90 days trading horizon Sri Lanka Telecom is expected to under-perform the ACL Plastics. In addition to that, Sri Lanka is 1.25 times more volatile than ACL Plastics PLC. It trades about -0.05 of its total potential returns per unit of risk. ACL Plastics PLC is currently generating about 0.42 per unit of volatility. If you would invest 44,000 in ACL Plastics PLC on August 27, 2024 and sell it today you would earn a total of 2,350 from holding ACL Plastics PLC or generate 5.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sri Lanka Telecom vs. ACL Plastics PLC
Performance |
| Timeline |
| Sri Lanka Telecom |
| ACL Plastics PLC |
Sri Lanka and ACL Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sri Lanka and ACL Plastics
The main advantage of trading using opposite Sri Lanka and ACL Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sri Lanka position performs unexpectedly, ACL Plastics 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 ACL Plastics will offset losses from the drop in ACL Plastics' long position.| Sri Lanka vs. SEYLAN BANK PLC | Sri Lanka vs. Pan Asia Banking | Sri Lanka vs. Lanka Credit and | Sri Lanka vs. Peoples Insurance PLC |
| ACL Plastics vs. John Keells Hotels | ACL Plastics vs. Serendib Hotels PLC | ACL Plastics vs. National Development Bank | ACL Plastics vs. Sigiriya Village Hotels |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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