Correlation Between Ceylon Hotels and DFCC Bank
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By analyzing existing cross correlation between Ceylon Hotels and DFCC Bank PLC, you can compare the effects of market volatilities on Ceylon Hotels and DFCC Bank 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 Ceylon Hotels with a short position of DFCC Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceylon Hotels and DFCC Bank.
Diversification Opportunities for Ceylon Hotels and DFCC Bank
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ceylon and DFCC is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ceylon Hotels and DFCC Bank PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFCC Bank PLC and Ceylon Hotels 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 Ceylon Hotels are associated (or correlated) with DFCC Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFCC Bank PLC has no effect on the direction of Ceylon Hotels i.e., Ceylon Hotels and DFCC Bank go up and down completely randomly.
Pair Corralation between Ceylon Hotels and DFCC Bank
Assuming the 90 days trading horizon Ceylon Hotels is expected to generate 1.38 times more return on investment than DFCC Bank. However, Ceylon Hotels is 1.38 times more volatile than DFCC Bank PLC. It trades about 0.05 of its potential returns per unit of risk. DFCC Bank PLC is currently generating about 0.03 per unit of risk. If you would invest 1,910 in Ceylon Hotels on September 12, 2024 and sell it today you would earn a total of 420.00 from holding Ceylon Hotels or generate 21.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.29% |
| Values | Daily Returns |
Ceylon Hotels vs. DFCC Bank PLC
Performance |
| Timeline |
| Ceylon Hotels |
| DFCC Bank PLC |
Ceylon Hotels and DFCC Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ceylon Hotels and DFCC Bank
The main advantage of trading using opposite Ceylon Hotels and DFCC Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ceylon Hotels position performs unexpectedly, DFCC Bank 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 DFCC Bank will offset losses from the drop in DFCC Bank's long position.| Ceylon Hotels vs. Jat Holdings PLC | Ceylon Hotels vs. Lanka Credit and | Ceylon Hotels vs. VIDULLANKA PLC | Ceylon Hotels vs. Carson Cumberbatch PLC |
| DFCC Bank vs. Jat Holdings PLC | DFCC Bank vs. Lanka Credit and | DFCC Bank vs. VIDULLANKA PLC | DFCC Bank vs. Carson Cumberbatch PLC |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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