Correlation Between DFCC Bank and Alliance Finance
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By analyzing existing cross correlation between DFCC Bank PLC and Alliance Finance, you can compare the effects of market volatilities on DFCC Bank and Alliance 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 DFCC Bank with a short position of Alliance Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFCC Bank and Alliance Finance.
Diversification Opportunities for DFCC Bank and Alliance Finance
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DFCC and Alliance is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding DFCC Bank PLC and Alliance Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Finance 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 Alliance Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Finance has no effect on the direction of DFCC Bank i.e., DFCC Bank and Alliance Finance go up and down completely randomly.
Pair Corralation between DFCC Bank and Alliance Finance
Assuming the 90 days trading horizon DFCC Bank is expected to generate 1.76 times less return on investment than Alliance Finance. But when comparing it to its historical volatility, DFCC Bank PLC is 1.68 times less risky than Alliance Finance. It trades about 0.13 of its potential returns per unit of risk. Alliance Finance is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 11,700 in Alliance Finance on August 28, 2024 and sell it today you would earn a total of 800.00 from holding Alliance Finance or generate 6.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFCC Bank PLC vs. Alliance Finance
Performance |
| Timeline |
| DFCC Bank PLC |
| Alliance Finance |
DFCC Bank and Alliance Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFCC Bank and Alliance Finance
The main advantage of trading using opposite DFCC Bank and Alliance Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFCC Bank position performs unexpectedly, Alliance 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 Alliance Finance will offset losses from the drop in Alliance Finance's long position.| DFCC Bank vs. CEYLON HOSPITALS PLC | DFCC Bank vs. RENUKA FOODS PLC | DFCC Bank vs. Lanka Milk Foods | DFCC Bank vs. Distilleries Company of |
| Alliance Finance vs. RENUKA FOODS PLC | Alliance Finance vs. Ceylon Hotels | Alliance Finance vs. Distilleries Company of | Alliance Finance vs. Lanka Realty Investments |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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