Correlation Between Amaya Leisure and Lanka Realty

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

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

Diversification Opportunities for Amaya Leisure and Lanka Realty

0.61

Correlation Coefficient

Amaya Leisure  Lanka Realty

Poor diversification

The 3 months correlation between Amaya and Lanka is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Amaya Leisure PLC and Lanka Realty Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lanka Realty Investments and Amaya Leisure 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 Amaya Leisure PLC are associated (or correlated) with Lanka Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lanka Realty Investments has no effect on the direction of Amaya Leisure i.e., Amaya Leisure and Lanka Realty go up and down completely randomly.

Pair Corralation between Amaya Leisure and Lanka Realty

Assuming the 90 days trading horizon Amaya Leisure PLC is expected to under-perform the Lanka Realty. But the stock apears to be less risky and, when comparing its historical volatility, Amaya Leisure PLC is 1.26 times less risky than Lanka Realty. The stock trades about -0.08 of its potential returns per unit of risk. The Lanka Realty Investments is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,390  in Lanka Realty Investments on December 31, 2024 and sell it today you would lose (180.00) from holding Lanka Realty Investments or give up 12.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Amaya Leisure PLC  vs.  Lanka Realty Investments

Amaya Leisure PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amaya Leisure PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lanka Realty Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lanka Realty Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Amaya Leisure and Lanka Realty

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

The idea behind Amaya Leisure PLC and Lanka Realty Investments 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.