Correlation Between Sri Lanka and Tal Lanka
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By analyzing existing cross correlation between Sri Lanka Telecom and Tal Lanka Hotels, you can compare the effects of market volatilities on Sri Lanka and Tal 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 Sri Lanka with a short position of Tal Lanka. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sri Lanka and Tal Lanka.
Diversification Opportunities for Sri Lanka and Tal Lanka
Very weak diversification
The 3 months correlation between Sri and Tal is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sri Lanka Telecom and Tal Lanka Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tal Lanka 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 Tal Lanka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tal Lanka Hotels has no effect on the direction of Sri Lanka i.e., Sri Lanka and Tal Lanka go up and down completely randomly.
Pair Corralation between Sri Lanka and Tal Lanka
Assuming the 90 days trading horizon Sri Lanka is expected to generate 5.34 times less return on investment than Tal Lanka. But when comparing it to its historical volatility, Sri Lanka Telecom is 1.29 times less risky than Tal Lanka. It trades about 0.01 of its potential returns per unit of risk. Tal Lanka Hotels is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,660 in Tal Lanka Hotels on September 14, 2024 and sell it today you would earn a total of 470.00 from holding Tal Lanka Hotels or generate 28.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.41% |
| Values | Daily Returns |
Sri Lanka Telecom vs. Tal Lanka Hotels
Performance |
| Timeline |
| Sri Lanka Telecom |
| Tal Lanka Hotels |
Sri Lanka and Tal Lanka Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sri Lanka and Tal Lanka
The main advantage of trading using opposite Sri Lanka and Tal Lanka positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sri Lanka position performs unexpectedly, Tal 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 Tal Lanka will offset losses from the drop in Tal Lanka's long position.| Sri Lanka vs. Tal Lanka Hotels | Sri Lanka vs. Keells Food Products | Sri Lanka vs. Convenience Foods PLC | Sri Lanka vs. Lanka Realty Investments |
| Tal Lanka vs. Jat Holdings PLC | Tal Lanka vs. Lanka Credit and | Tal Lanka vs. VIDULLANKA PLC | Tal Lanka vs. Carson Cumberbatch 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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