Correlation Between Sri Lanka and EX PACK

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

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

Diversification Opportunities for Sri Lanka and EX PACK

0.83

Correlation Coefficient

Sri Lanka  EX PACK

Very poor diversification

The 3 months correlation between Sri and PACKN0000 is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sri Lanka Telecom and EX PACK RUGATED CARTONS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EX PACK RUGATED and Sri Lanka 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 Sri Lanka Telecom are associated (or correlated) with EX PACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EX PACK RUGATED has no effect on the direction of Sri Lanka i.e., Sri Lanka and EX PACK go up and down completely randomly.

Pair Corralation between Sri Lanka and EX PACK

Assuming the 90 days trading horizon Sri Lanka Telecom is expected to under-perform the EX PACK. In addition to that, Sri Lanka is 1.22 times more volatile than EX PACK RUGATED CARTONS. It trades about -0.19 of its total potential returns per unit of risk. EX PACK RUGATED CARTONS is currently generating about -0.21 per unit of volatility. If you would invest  1,650  in EX PACK RUGATED CARTONS on December 26, 2024 and sell it today you would lose (250.00) from holding EX PACK RUGATED CARTONS or give up 15.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.28%
Values	Daily Returns

Sri Lanka Telecom  vs.  EX PACK RUGATED CARTONS

Sri Lanka Telecom

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sri Lanka Telecom 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

EX PACK RUGATED

Risk-Adjusted Performance

Very Weak

Over the last 90 days EX PACK RUGATED CARTONS 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sri Lanka and EX PACK

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

The idea behind Sri Lanka Telecom and EX PACK RUGATED CARTONS 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.