Correlation Between Union Chemicals and Palm Garden
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By analyzing existing cross correlation between Union Chemicals Lanka and Palm Garden Hotels, you can compare the effects of market volatilities on Union Chemicals 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 Union Chemicals with a short position of Palm Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Chemicals and Palm Garden.
Diversification Opportunities for Union Chemicals and Palm Garden
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Union and Palm is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Union Chemicals Lanka 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 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 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 Union Chemicals i.e., Union Chemicals and Palm Garden go up and down completely randomly.
Pair Corralation between Union Chemicals and Palm Garden
Assuming the 90 days trading horizon Union Chemicals Lanka is expected to generate 0.3 times more return on investment than Palm Garden. However, Union Chemicals Lanka is 3.28 times less risky than Palm Garden. It trades about 0.23 of its potential returns per unit of risk. Palm Garden Hotels is currently generating about 0.01 per unit of risk. If you would invest 72,650 in Union Chemicals Lanka on November 30, 2024 and sell it today you would earn a total of 6,275 from holding Union Chemicals Lanka or generate 8.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Chemicals Lanka vs. Palm Garden Hotels
Performance |
| Timeline |
| Union Chemicals Lanka |
| Palm Garden Hotels |
Union Chemicals and Palm Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Chemicals and Palm Garden
The main advantage of trading using opposite Union Chemicals and Palm Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Chemicals 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.| Union Chemicals vs. Merchant Bank of | Union Chemicals vs. Lanka Realty Investments | Union Chemicals vs. Softlogic Life Insurance | Union Chemicals vs. Sampath Bank PLC |
| Palm Garden vs. RENUKA FOODS PLC | Palm Garden vs. DFCC Bank PLC | Palm Garden vs. Sampath Bank PLC | Palm Garden vs. COMMERCIAL BANK OF |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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