Correlation Between Sri Lanka and Convenience Foods
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By analyzing existing cross correlation between Sri Lanka Telecom and Convenience Foods PLC, you can compare the effects of market volatilities on Sri Lanka and Convenience Foods 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 Convenience Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sri Lanka and Convenience Foods.
Diversification Opportunities for Sri Lanka and Convenience Foods
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sri and Convenience is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sri Lanka Telecom and Convenience Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Convenience Foods 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 Convenience Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Convenience Foods PLC has no effect on the direction of Sri Lanka i.e., Sri Lanka and Convenience Foods go up and down completely randomly.
Pair Corralation between Sri Lanka and Convenience Foods
Assuming the 90 days trading horizon Sri Lanka Telecom is expected to generate 1.11 times more return on investment than Convenience Foods. However, Sri Lanka is 1.11 times more volatile than Convenience Foods PLC. It trades about -0.04 of its potential returns per unit of risk. Convenience Foods PLC is currently generating about -0.06 per unit of risk. If you would invest 9,460 in Sri Lanka Telecom on August 27, 2024 and sell it today you would lose (2,760) from holding Sri Lanka Telecom or give up 29.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 74.65% |
| Values | Daily Returns |
Sri Lanka Telecom vs. Convenience Foods PLC
Performance |
| Timeline |
| Sri Lanka Telecom |
| Convenience Foods PLC |
Sri Lanka and Convenience Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sri Lanka and Convenience Foods
The main advantage of trading using opposite Sri Lanka and Convenience Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sri Lanka position performs unexpectedly, Convenience Foods 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 Convenience Foods will offset losses from the drop in Convenience Foods' long position.| Sri Lanka vs. Browns Beach Hotels | Sri Lanka vs. Mahaweli Reach Hotel | Sri Lanka vs. CEYLINCO INSURANCE PLC | Sri Lanka vs. Lanka Realty Investments |
| Convenience Foods vs. Union Chemicals Lanka | Convenience Foods vs. Union Bank | Convenience Foods vs. Janashakthi Insurance | Convenience Foods vs. Seylan Bank 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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