Correlation Between Ceylon Hospitals and Madulsima Plantations

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

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

Diversification Opportunities for Ceylon Hospitals and Madulsima Plantations

0.0

Correlation Coefficient

Ceylon Hospitals  Madulsima Plantations

Pay attention - limited upside

The 3 months correlation between Ceylon and Madulsima is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ceylon Hospitals PLC and Madulsima Plantations PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madulsima Plantations PLC and Ceylon Hospitals 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 Ceylon Hospitals PLC are associated (or correlated) with Madulsima Plantations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madulsima Plantations PLC has no effect on the direction of Ceylon Hospitals i.e., Ceylon Hospitals and Madulsima Plantations go up and down completely randomly.

Pair Corralation between Ceylon Hospitals and Madulsima Plantations

If you would invest  13,475  in Ceylon Hospitals PLC on October 25, 2024 and sell it today you would lose (1,325) from holding Ceylon Hospitals PLC or give up 9.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Ceylon Hospitals PLC  vs.  Madulsima Plantations PLC

Ceylon Hospitals PLC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ceylon Hospitals PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ceylon Hospitals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Madulsima Plantations PLC

Risk-Adjusted Performance

0 of 100

OK

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

Pair Trading with Ceylon Hospitals and Madulsima Plantations

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

The idea behind Ceylon Hospitals PLC and Madulsima Plantations 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.