Correlation Between VIDULLANKA PLC and Softlogic Life

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Can any of the company-specific risk be diversified away by investing in both VIDULLANKA PLC and Softlogic Life at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining VIDULLANKA PLC and Softlogic Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VIDULLANKA PLC and Softlogic Life Insurance, you can compare the effects of market volatilities on VIDULLANKA PLC and Softlogic Life 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 VIDULLANKA PLC with a short position of Softlogic Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIDULLANKA PLC and Softlogic Life.

Diversification Opportunities for VIDULLANKA PLC and Softlogic Life

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between VIDULLANKA and Softlogic is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding VIDULLANKA PLC and Softlogic Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Softlogic Life Insurance and VIDULLANKA PLC 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 VIDULLANKA PLC are associated (or correlated) with Softlogic Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Softlogic Life Insurance has no effect on the direction of VIDULLANKA PLC i.e., VIDULLANKA PLC and Softlogic Life go up and down completely randomly.

Pair Corralation between VIDULLANKA PLC and Softlogic Life

Assuming the 90 days trading horizon VIDULLANKA PLC is expected to generate 0.86 times more return on investment than Softlogic Life. However, VIDULLANKA PLC is 1.16 times less risky than Softlogic Life. It trades about 0.08 of its potential returns per unit of risk. Softlogic Life Insurance is currently generating about 0.03 per unit of risk. If you would invest  450.00  in VIDULLANKA PLC on September 2, 2024 and sell it today you would earn a total of  480.00  from holding VIDULLANKA PLC or generate 106.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy89.47%
ValuesDaily Returns

VIDULLANKA PLC  vs.  Softlogic Life Insurance

 Performance 
       Timeline  
VIDULLANKA PLC 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in VIDULLANKA PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, VIDULLANKA PLC sustained solid returns over the last few months and may actually be approaching a breakup point.
Softlogic Life Insurance 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Softlogic Life Insurance are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Softlogic Life may actually be approaching a critical reversion point that can send shares even higher in January 2025.

VIDULLANKA PLC and Softlogic Life Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VIDULLANKA PLC and Softlogic Life

The main advantage of trading using opposite VIDULLANKA PLC and Softlogic Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIDULLANKA PLC position performs unexpectedly, Softlogic Life 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 Softlogic Life will offset losses from the drop in Softlogic Life's long position.
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The idea behind VIDULLANKA PLC and Softlogic Life Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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