Correlation Between Ceylon Tobacco and SEYLAN BANK
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By analyzing existing cross correlation between Ceylon Tobacco and SEYLAN BANK PLC, you can compare the effects of market volatilities on Ceylon Tobacco and SEYLAN 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 Tobacco with a short position of SEYLAN BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceylon Tobacco and SEYLAN BANK.
Diversification Opportunities for Ceylon Tobacco and SEYLAN BANK
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ceylon and SEYLAN is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ceylon Tobacco and SEYLAN BANK PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEYLAN BANK PLC and Ceylon Tobacco 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 Tobacco are associated (or correlated) with SEYLAN BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEYLAN BANK PLC has no effect on the direction of Ceylon Tobacco i.e., Ceylon Tobacco and SEYLAN BANK go up and down completely randomly.
Pair Corralation between Ceylon Tobacco and SEYLAN BANK
Assuming the 90 days trading horizon Ceylon Tobacco is expected to generate 0.55 times more return on investment than SEYLAN BANK. However, Ceylon Tobacco is 1.83 times less risky than SEYLAN BANK. It trades about 0.16 of its potential returns per unit of risk. SEYLAN BANK PLC is currently generating about -0.03 per unit of risk. If you would invest 123,750 in Ceylon Tobacco on August 31, 2024 and sell it today you would earn a total of 3,750 from holding Ceylon Tobacco or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ceylon Tobacco vs. SEYLAN BANK PLC
Performance |
| Timeline |
| Ceylon Tobacco |
| SEYLAN BANK PLC |
Ceylon Tobacco and SEYLAN BANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ceylon Tobacco and SEYLAN BANK
The main advantage of trading using opposite Ceylon Tobacco and SEYLAN BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ceylon Tobacco position performs unexpectedly, SEYLAN 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 SEYLAN BANK will offset losses from the drop in SEYLAN BANK's long position.| Ceylon Tobacco vs. Arpico Insurance | Ceylon Tobacco vs. Ceylinco Insurance PLC | Ceylon Tobacco vs. Janashakthi Insurance | Ceylon Tobacco vs. Softlogic Life Insurance |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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