Correlation Between Astar and Lanka Ceramic

Can any of the company-specific risk be diversified away by investing in both Astar and Lanka Ceramic 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 Astar and Lanka Ceramic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astar and Lanka Ceramic PLC, you can compare the effects of market volatilities on Astar and Lanka Ceramic 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 Astar with a short position of Lanka Ceramic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Lanka Ceramic.

Diversification Opportunities for Astar and Lanka Ceramic

-0.54

Correlation Coefficient

Astar  Lanka Ceramic

Excellent diversification

The 3 months correlation between Astar and Lanka is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Lanka Ceramic PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lanka Ceramic PLC and Astar 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 Astar are associated (or correlated) with Lanka Ceramic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lanka Ceramic PLC has no effect on the direction of Astar i.e., Astar and Lanka Ceramic go up and down completely randomly.

Pair Corralation between Astar and Lanka Ceramic

Assuming the 90 days trading horizon Astar is expected to under-perform the Lanka Ceramic. In addition to that, Astar is 2.05 times more volatile than Lanka Ceramic PLC. It trades about -0.19 of its total potential returns per unit of risk. Lanka Ceramic PLC is currently generating about -0.03 per unit of volatility. If you would invest  14,825  in Lanka Ceramic PLC on December 23, 2024 and sell it today you would lose (800.00) from holding Lanka Ceramic PLC or give up 5.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	86.15%
Values	Daily Returns

Astar  vs.  Lanka Ceramic PLC

Astar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Astar shareholders.

Lanka Ceramic PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lanka Ceramic PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Lanka Ceramic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Astar and Lanka Ceramic

The main advantage of trading using opposite Astar and Lanka Ceramic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, Lanka Ceramic 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 Ceramic will offset losses from the drop in Lanka Ceramic's long position.

The idea behind Astar and Lanka Ceramic PLC 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.