Correlation Between EX PACK and Senkadagala Finance

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

Diversification Opportunities for EX PACK and Senkadagala Finance

-0.06

Correlation Coefficient

EX PACK  Senkadagala Finance

Good diversification

The 3 months correlation between PACKN0000 and Senkadagala is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding EX PACK RUGATED CARTONS and Senkadagala Finance PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senkadagala Finance PLC 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 Senkadagala Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senkadagala Finance PLC has no effect on the direction of EX PACK i.e., EX PACK and Senkadagala Finance go up and down completely randomly.

Pair Corralation between EX PACK and Senkadagala Finance

Assuming the 90 days trading horizon EX PACK is expected to generate 1.08 times less return on investment than Senkadagala Finance. In addition to that, EX PACK is 1.15 times more volatile than Senkadagala Finance PLC. It trades about 0.2 of its total potential returns per unit of risk. Senkadagala Finance PLC is currently generating about 0.25 per unit of volatility. If you would invest  35,000  in Senkadagala Finance PLC on September 27, 2024 and sell it today you would earn a total of  3,400  from holding Senkadagala Finance PLC or generate 9.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	44.26%
Values	Daily Returns

EX PACK RUGATED CARTONS  vs.  Senkadagala Finance PLC

EX PACK RUGATED

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EX PACK RUGATED CARTONS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EX PACK sustained solid returns over the last few months and may actually be approaching a breakup point.

Senkadagala Finance PLC

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Senkadagala Finance PLC are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Senkadagala Finance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EX PACK and Senkadagala Finance

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

The idea behind EX PACK RUGATED CARTONS and Senkadagala Finance 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.