Correlation Between Union Chemicals and Kandy Hotels
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By analyzing existing cross correlation between Union Chemicals Lanka and Kandy Hotels, you can compare the effects of market volatilities on Union Chemicals and Kandy Hotels 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 Union Chemicals with a short position of Kandy Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Chemicals and Kandy Hotels.
Diversification Opportunities for Union Chemicals and Kandy Hotels
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Union and Kandy is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Union Chemicals Lanka and Kandy Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kandy Hotels and Union Chemicals 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 Union Chemicals Lanka are associated (or correlated) with Kandy Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kandy Hotels has no effect on the direction of Union Chemicals i.e., Union Chemicals and Kandy Hotels go up and down completely randomly.
Pair Corralation between Union Chemicals and Kandy Hotels
Assuming the 90 days trading horizon Union Chemicals Lanka is expected to under-perform the Kandy Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Union Chemicals Lanka is 5.36 times less risky than Kandy Hotels. The stock trades about -0.34 of its potential returns per unit of risk. The Kandy Hotels is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 800.00 in Kandy Hotels on August 31, 2024 and sell it today you would earn a total of 150.00 from holding Kandy Hotels or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
Union Chemicals Lanka vs. Kandy Hotels
Performance |
| Timeline |
| Union Chemicals Lanka |
| Kandy Hotels |
Union Chemicals and Kandy Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Chemicals and Kandy Hotels
The main advantage of trading using opposite Union Chemicals and Kandy Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Chemicals position performs unexpectedly, Kandy Hotels 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 Kandy Hotels will offset losses from the drop in Kandy Hotels' long position.| Union Chemicals vs. HATTON NATIONAL BANK | Union Chemicals vs. Citrus Leisure PLC | Union Chemicals vs. Ceylinco Insurance PLC | Union Chemicals vs. CEYLINCO INSURANCE PLC |
| Kandy Hotels vs. Ceylinco Insurance PLC | Kandy Hotels vs. HATTON NATIONAL BANK | Kandy Hotels vs. Softlogic Life Insurance | Kandy Hotels vs. Amana Bank |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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