Correlation Between Astar and CEYLON HOSPITALS

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

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

Diversification Opportunities for Astar and CEYLON HOSPITALS

0.16

Correlation Coefficient

Astar  CEYLON HOSPITALS

Average diversification

The 3 months correlation between Astar and CEYLON is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Astar and CEYLON HOSPITALS PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEYLON HOSPITALS 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 CEYLON HOSPITALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEYLON HOSPITALS PLC has no effect on the direction of Astar i.e., Astar and CEYLON HOSPITALS go up and down completely randomly.

Pair Corralation between Astar and CEYLON HOSPITALS

Assuming the 90 days trading horizon Astar is expected to under-perform the CEYLON HOSPITALS. In addition to that, Astar is 3.14 times more volatile than CEYLON HOSPITALS PLC. It trades about -0.18 of its total potential returns per unit of risk. CEYLON HOSPITALS PLC is currently generating about 0.31 per unit of volatility. If you would invest  8,990  in CEYLON HOSPITALS PLC on October 12, 2024 and sell it today you would earn a total of  820.00  from holding CEYLON HOSPITALS PLC or generate 9.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	80.95%
Values	Daily Returns

Astar  vs.  CEYLON HOSPITALS PLC

Astar

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Astar is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

CEYLON HOSPITALS PLC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CEYLON HOSPITALS PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CEYLON HOSPITALS sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astar and CEYLON HOSPITALS

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

The idea behind Astar and CEYLON HOSPITALS 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.