Correlation Between Lanka Milk and Galadari Hotels
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By analyzing existing cross correlation between Lanka Milk Foods and Galadari Hotels Lanka, you can compare the effects of market volatilities on Lanka Milk and Galadari 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 Lanka Milk with a short position of Galadari Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lanka Milk and Galadari Hotels.
Diversification Opportunities for Lanka Milk and Galadari Hotels
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lanka and Galadari is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lanka Milk Foods and Galadari Hotels Lanka in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galadari Hotels Lanka and Lanka Milk 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 Lanka Milk Foods are associated (or correlated) with Galadari Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galadari Hotels Lanka has no effect on the direction of Lanka Milk i.e., Lanka Milk and Galadari Hotels go up and down completely randomly.
Pair Corralation between Lanka Milk and Galadari Hotels
Assuming the 90 days trading horizon Lanka Milk Foods is expected to generate 0.98 times more return on investment than Galadari Hotels. However, Lanka Milk Foods is 1.02 times less risky than Galadari Hotels. It trades about 0.35 of its potential returns per unit of risk. Galadari Hotels Lanka is currently generating about 0.17 per unit of risk. If you would invest 2,950 in Lanka Milk Foods on October 8, 2024 and sell it today you would earn a total of 2,110 from holding Lanka Milk Foods or generate 71.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Lanka Milk Foods vs. Galadari Hotels Lanka
Performance |
Timeline |
Lanka Milk Foods |
Galadari Hotels Lanka |
Lanka Milk and Galadari Hotels Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lanka Milk and Galadari Hotels
The main advantage of trading using opposite Lanka Milk and Galadari Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lanka Milk position performs unexpectedly, Galadari 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 Galadari Hotels will offset losses from the drop in Galadari Hotels' long position.Lanka Milk vs. Sri Lanka Telecom | Lanka Milk vs. COMMERCIAL BANK OF | Lanka Milk vs. Sampath Bank PLC | Lanka Milk vs. Citrus Leisure PLC |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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