Correlation Between DFCC Bank and HNB Finance
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By analyzing existing cross correlation between DFCC Bank PLC and HNB Finance, you can compare the effects of market volatilities on DFCC Bank and HNB 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 HNB Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFCC Bank and HNB Finance.
Diversification Opportunities for DFCC Bank and HNB Finance
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DFCC and HNB is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding DFCC Bank PLC and HNB Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNB 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 HNB Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HNB Finance has no effect on the direction of DFCC Bank i.e., DFCC Bank and HNB Finance go up and down completely randomly.
Pair Corralation between DFCC Bank and HNB Finance
Assuming the 90 days trading horizon DFCC Bank PLC is expected to generate 0.65 times more return on investment than HNB Finance. However, DFCC Bank PLC is 1.53 times less risky than HNB Finance. It trades about 0.3 of its potential returns per unit of risk. HNB Finance is currently generating about 0.09 per unit of risk. If you would invest 6,550 in DFCC Bank PLC on September 2, 2024 and sell it today you would earn a total of 2,240 from holding DFCC Bank PLC or generate 34.2% 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. HNB Finance
Performance |
| Timeline |
| DFCC Bank PLC |
| HNB Finance |
DFCC Bank and HNB Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFCC Bank and HNB Finance
The main advantage of trading using opposite DFCC Bank and HNB Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFCC Bank position performs unexpectedly, HNB 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 HNB Finance will offset losses from the drop in HNB Finance's long position.| DFCC Bank vs. Prime Lands Residencies | DFCC Bank vs. VIDULLANKA PLC | DFCC Bank vs. EX PACK RUGATED CARTONS |
| HNB Finance vs. Prime Lands Residencies | HNB Finance vs. VIDULLANKA PLC | HNB Finance vs. EX PACK RUGATED CARTONS |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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