Correlation Between Amaya Leisure and Serendib Hotels

Can any of the company-specific risk be diversified away by investing in both Amaya Leisure and Serendib Hotels 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 Serendib Hotels 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 Serendib Hotels PLC, you can compare the effects of market volatilities on Amaya Leisure and Serendib Hotels 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 Serendib Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amaya Leisure and Serendib Hotels.

Diversification Opportunities for Amaya Leisure and Serendib Hotels

0.83

Correlation Coefficient

Amaya Leisure  Serendib Hotels

Very poor diversification

The 3 months correlation between Amaya and Serendib is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Amaya Leisure PLC and Serendib Hotels PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Serendib Hotels PLC 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 Serendib Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Serendib Hotels PLC has no effect on the direction of Amaya Leisure i.e., Amaya Leisure and Serendib Hotels go up and down completely randomly.

Pair Corralation between Amaya Leisure and Serendib Hotels

Assuming the 90 days trading horizon Amaya Leisure PLC is expected to under-perform the Serendib Hotels. In addition to that, Amaya Leisure is 1.01 times more volatile than Serendib Hotels PLC. It trades about -0.05 of its total potential returns per unit of risk. Serendib Hotels PLC is currently generating about 0.04 per unit of volatility. If you would invest  1,940  in Serendib Hotels PLC on December 3, 2024 and sell it today you would earn a total of  70.00  from holding Serendib Hotels PLC or generate 3.61% return on investment over 90 days.

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

Amaya Leisure PLC  vs.  Serendib Hotels PLC

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 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.

Serendib Hotels PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Serendib Hotels PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Serendib Hotels is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amaya Leisure and Serendib Hotels

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

The idea behind Amaya Leisure PLC and Serendib Hotels 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.