Correlation Between DFCC Bank and Sri Lanka
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By analyzing existing cross correlation between DFCC Bank PLC and Sri Lanka Telecom, you can compare the effects of market volatilities on DFCC Bank and Sri Lanka 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 Sri Lanka. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFCC Bank and Sri Lanka.
Diversification Opportunities for DFCC Bank and Sri Lanka
Poor diversification
The 3 months correlation between DFCC and Sri is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding DFCC Bank PLC and Sri Lanka Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sri Lanka Telecom 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 Sri Lanka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sri Lanka Telecom has no effect on the direction of DFCC Bank i.e., DFCC Bank and Sri Lanka go up and down completely randomly.
Pair Corralation between DFCC Bank and Sri Lanka
Assuming the 90 days trading horizon DFCC Bank PLC is expected to generate 0.87 times more return on investment than Sri Lanka. However, DFCC Bank PLC is 1.15 times less risky than Sri Lanka. It trades about 0.02 of its potential returns per unit of risk. Sri Lanka Telecom is currently generating about -0.08 per unit of risk. If you would invest 8,250 in DFCC Bank PLC on September 4, 2024 and sell it today you would earn a total of 510.00 from holding DFCC Bank PLC or generate 6.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFCC Bank PLC vs. Sri Lanka Telecom
Performance |
| Timeline |
| DFCC Bank PLC |
| Sri Lanka Telecom |
DFCC Bank and Sri Lanka Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFCC Bank and Sri Lanka
The main advantage of trading using opposite DFCC Bank and Sri Lanka positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFCC Bank position performs unexpectedly, Sri Lanka 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 Sri Lanka will offset losses from the drop in Sri Lanka's long position.| DFCC Bank vs. Ceylon Hotels | DFCC Bank vs. HVA Foods PLC | DFCC Bank vs. Aitken Spence Hotel | DFCC Bank vs. Mahaweli Reach Hotel |
| Sri Lanka vs. Ceylon Beverage Holdings | Sri Lanka vs. Union Chemicals Lanka | Sri Lanka vs. Lion Brewery Ceylon | Sri Lanka vs. Citrus Leisure 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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