Correlation Between EX PACK and Tal Lanka

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

By analyzing existing cross correlation between EX PACK RUGATED CARTONS and Tal Lanka Hotels, you can compare the effects of market volatilities on EX PACK and Tal Lanka 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 EX PACK with a short position of Tal Lanka. Check out your portfolio center. Please also check ongoing floating volatility patterns of EX PACK and Tal Lanka.

Diversification Opportunities for EX PACK and Tal Lanka

0.27

Correlation Coefficient

EX PACK  Tal Lanka

Modest diversification

The 3 months correlation between PACKN0000 and Tal is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding EX PACK RUGATED CARTONS and Tal Lanka Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tal Lanka Hotels and EX PACK 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 EX PACK RUGATED CARTONS are associated (or correlated) with Tal Lanka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tal Lanka Hotels has no effect on the direction of EX PACK i.e., EX PACK and Tal Lanka go up and down completely randomly.

Pair Corralation between EX PACK and Tal Lanka

Assuming the 90 days trading horizon EX PACK is expected to generate 1.13 times less return on investment than Tal Lanka. But when comparing it to its historical volatility, EX PACK RUGATED CARTONS is 1.64 times less risky than Tal Lanka. It trades about 0.03 of its potential returns per unit of risk. Tal Lanka Hotels is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,200  in Tal Lanka Hotels on December 5, 2024 and sell it today you would earn a total of  20.00  from holding Tal Lanka Hotels or generate 0.91% return on investment over 90 days.

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

EX PACK RUGATED CARTONS  vs.  Tal Lanka Hotels

EX PACK RUGATED

Risk-Adjusted Performance

Weak

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

Tal Lanka Hotels

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tal Lanka Hotels are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Tal Lanka is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EX PACK and Tal Lanka

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

The idea behind EX PACK RUGATED CARTONS and Tal Lanka Hotels 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.