Correlation Between Convenience Foods and Lanka Milk
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By analyzing existing cross correlation between Convenience Foods PLC and Lanka Milk Foods, you can compare the effects of market volatilities on Convenience Foods and Lanka Milk 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 Convenience Foods with a short position of Lanka Milk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Convenience Foods and Lanka Milk.
Diversification Opportunities for Convenience Foods and Lanka Milk
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Convenience and Lanka is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Convenience Foods PLC and Lanka Milk Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lanka Milk Foods and Convenience Foods 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 Convenience Foods PLC are associated (or correlated) with Lanka Milk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lanka Milk Foods has no effect on the direction of Convenience Foods i.e., Convenience Foods and Lanka Milk go up and down completely randomly.
Pair Corralation between Convenience Foods and Lanka Milk
Assuming the 90 days trading horizon Convenience Foods PLC is expected to generate 0.24 times more return on investment than Lanka Milk. However, Convenience Foods PLC is 4.16 times less risky than Lanka Milk. It trades about -0.04 of its potential returns per unit of risk. Lanka Milk Foods is currently generating about -0.03 per unit of risk. If you would invest 97,000 in Convenience Foods PLC on August 27, 2024 and sell it today you would lose (12,950) from holding Convenience Foods PLC or give up 13.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 84.58% |
| Values | Daily Returns |
Convenience Foods PLC vs. Lanka Milk Foods
Performance |
| Timeline |
| Convenience Foods PLC |
| Lanka Milk Foods |
Convenience Foods and Lanka Milk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Convenience Foods and Lanka Milk
The main advantage of trading using opposite Convenience Foods and Lanka Milk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Convenience Foods position performs unexpectedly, Lanka Milk 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 Lanka Milk will offset losses from the drop in Lanka Milk's long position.| Convenience Foods vs. Union Chemicals Lanka | Convenience Foods vs. Union Bank | Convenience Foods vs. Janashakthi Insurance | Convenience Foods vs. Seylan Bank PLC |
| Lanka Milk vs. BROWNS INVESTMENTS PLC | Lanka Milk vs. Distilleries Company of | Lanka Milk vs. Sri Lanka Telecom | Lanka Milk vs. Convenience Foods 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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