Correlation Between Lion Brewery and Sanasa Development
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By analyzing existing cross correlation between Lion Brewery Ceylon and Sanasa Development Bank, you can compare the effects of market volatilities on Lion Brewery and Sanasa Development 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 Lion Brewery with a short position of Sanasa Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Brewery and Sanasa Development.
Diversification Opportunities for Lion Brewery and Sanasa Development
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lion and Sanasa is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lion Brewery Ceylon and Sanasa Development Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanasa Development Bank and Lion Brewery 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 Lion Brewery Ceylon are associated (or correlated) with Sanasa Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanasa Development Bank has no effect on the direction of Lion Brewery i.e., Lion Brewery and Sanasa Development go up and down completely randomly.
Pair Corralation between Lion Brewery and Sanasa Development
Assuming the 90 days trading horizon Lion Brewery Ceylon is expected to generate 1.68 times more return on investment than Sanasa Development. However, Lion Brewery is 1.68 times more volatile than Sanasa Development Bank. It trades about 0.15 of its potential returns per unit of risk. Sanasa Development Bank is currently generating about 0.12 per unit of risk. If you would invest 100,050 in Lion Brewery Ceylon on September 15, 2024 and sell it today you would earn a total of 21,775 from holding Lion Brewery Ceylon or generate 21.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.33% |
Values | Daily Returns |
Lion Brewery Ceylon vs. Sanasa Development Bank
Performance |
Timeline |
Lion Brewery Ceylon |
Sanasa Development Bank |
Lion Brewery and Sanasa Development Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lion Brewery and Sanasa Development
The main advantage of trading using opposite Lion Brewery and Sanasa Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Brewery position performs unexpectedly, Sanasa Development 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 Sanasa Development will offset losses from the drop in Sanasa Development's long position.Lion Brewery vs. Serendib Hotels PLC | Lion Brewery vs. Eden Hotel Lanka | Lion Brewery vs. Pegasus Hotels of | Lion Brewery vs. Lanka Realty Investments |
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Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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