Correlation Between CEYLON HOSPITALS and Ceylon Guardian

Can any of the company-specific risk be diversified away by investing in both CEYLON HOSPITALS and Ceylon Guardian 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 Ceylon Guardian 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 Ceylon Guardian Investment, you can compare the effects of market volatilities on CEYLON HOSPITALS and Ceylon Guardian 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 Ceylon Guardian. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEYLON HOSPITALS and Ceylon Guardian.

Diversification Opportunities for CEYLON HOSPITALS and Ceylon Guardian

0.49

Correlation Coefficient

CEYLON HOSPITALS  Ceylon Guardian

Very weak diversification

The 3 months correlation between CEYLON and Ceylon is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding CEYLON HOSPITALS PLC and Ceylon Guardian Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceylon Guardian Inve 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 Ceylon Guardian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceylon Guardian Inve has no effect on the direction of CEYLON HOSPITALS i.e., CEYLON HOSPITALS and Ceylon Guardian go up and down completely randomly.

Pair Corralation between CEYLON HOSPITALS and Ceylon Guardian

Assuming the 90 days trading horizon CEYLON HOSPITALS PLC is expected to generate 0.94 times more return on investment than Ceylon Guardian. However, CEYLON HOSPITALS PLC is 1.06 times less risky than Ceylon Guardian. It trades about 0.06 of its potential returns per unit of risk. Ceylon Guardian Investment is currently generating about 0.0 per unit of risk. If you would invest  9,900  in CEYLON HOSPITALS PLC on December 26, 2024 and sell it today you would earn a total of  700.00  from holding CEYLON HOSPITALS PLC or generate 7.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	87.72%
Values	Daily Returns

CEYLON HOSPITALS PLC  vs.  Ceylon Guardian Investment

CEYLON HOSPITALS PLC

Risk-Adjusted Performance

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 April 2025.

Ceylon Guardian Inve

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ceylon Guardian Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ceylon Guardian 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 Ceylon Guardian

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

The idea behind CEYLON HOSPITALS PLC and Ceylon Guardian Investment 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.