Correlation Between DFCC Bank and Arpico Insurance
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By analyzing existing cross correlation between DFCC Bank PLC and Arpico Insurance, you can compare the effects of market volatilities on DFCC Bank and Arpico Insurance 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 DFCC Bank with a short position of Arpico Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFCC Bank and Arpico Insurance.
Diversification Opportunities for DFCC Bank and Arpico Insurance
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DFCC and Arpico is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding DFCC Bank PLC and Arpico Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arpico Insurance and DFCC Bank 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 DFCC Bank PLC are associated (or correlated) with Arpico Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arpico Insurance has no effect on the direction of DFCC Bank i.e., DFCC Bank and Arpico Insurance go up and down completely randomly.
Pair Corralation between DFCC Bank and Arpico Insurance
Assuming the 90 days trading horizon DFCC Bank PLC is expected to generate 0.74 times more return on investment than Arpico Insurance. However, DFCC Bank PLC is 1.35 times less risky than Arpico Insurance. It trades about 0.22 of its potential returns per unit of risk. Arpico Insurance is currently generating about -0.3 per unit of risk. If you would invest 7,940 in DFCC Bank PLC on August 24, 2024 and sell it today you would earn a total of 580.00 from holding DFCC Bank PLC or generate 7.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
DFCC Bank PLC vs. Arpico Insurance
Performance |
| Timeline |
| DFCC Bank PLC |
| Arpico Insurance |
DFCC Bank and Arpico Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFCC Bank and Arpico Insurance
The main advantage of trading using opposite DFCC Bank and Arpico Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFCC Bank position performs unexpectedly, Arpico Insurance 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 Arpico Insurance will offset losses from the drop in Arpico Insurance's long position.| DFCC Bank vs. HNB Finance | DFCC Bank vs. Prime Lands Residencies | DFCC Bank vs. Jat Holdings PLC | DFCC Bank vs. E M L |
| Arpico Insurance vs. HNB Finance | Arpico Insurance vs. Prime Lands Residencies | Arpico Insurance vs. Jat Holdings PLC | Arpico Insurance vs. E M L |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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