Correlation Between Sri Lanka and Palm Garden
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By analyzing existing cross correlation between Sri Lanka Telecom and Palm Garden Hotels, you can compare the effects of market volatilities on Sri Lanka and Palm Garden 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 Palm Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sri Lanka and Palm Garden.
Diversification Opportunities for Sri Lanka and Palm Garden
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sri and Palm is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sri Lanka Telecom and Palm Garden Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palm Garden Hotels 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 Palm Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palm Garden Hotels has no effect on the direction of Sri Lanka i.e., Sri Lanka and Palm Garden go up and down completely randomly.
Pair Corralation between Sri Lanka and Palm Garden
Assuming the 90 days trading horizon Sri Lanka Telecom is expected to under-perform the Palm Garden. But the stock apears to be less risky and, when comparing its historical volatility, Sri Lanka Telecom is 2.11 times less risky than Palm Garden. The stock trades about -0.07 of its potential returns per unit of risk. The Palm Garden Hotels is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 4,230 in Palm Garden Hotels on August 31, 2024 and sell it today you would earn a total of 400.00 from holding Palm Garden Hotels or generate 9.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Sri Lanka Telecom vs. Palm Garden Hotels
Performance |
| Timeline |
| Sri Lanka Telecom |
| Palm Garden Hotels |
Sri Lanka and Palm Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sri Lanka and Palm Garden
The main advantage of trading using opposite Sri Lanka and Palm Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sri Lanka position performs unexpectedly, Palm Garden 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 Palm Garden will offset losses from the drop in Palm Garden's long position.| Sri Lanka vs. HNB Finance | Sri Lanka vs. Prime Lands Residencies | Sri Lanka vs. Jat Holdings PLC | Sri Lanka vs. E M L |
| Palm Garden vs. Pegasus Hotels of | Palm Garden vs. Peoples Insurance PLC | Palm Garden vs. Sigiriya Village Hotels | Palm Garden 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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