Correlation Between DFCC Bank and Union Bank
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By analyzing existing cross correlation between DFCC Bank PLC and Union Bank, you can compare the effects of market volatilities on DFCC Bank and Union 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 DFCC Bank with a short position of Union Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFCC Bank and Union Bank.
Diversification Opportunities for DFCC Bank and Union Bank
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DFCC and Union is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding DFCC Bank PLC and Union Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Bank 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 Union Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Bank has no effect on the direction of DFCC Bank i.e., DFCC Bank and Union Bank go up and down completely randomly.
Pair Corralation between DFCC Bank and Union Bank
Assuming the 90 days trading horizon DFCC Bank PLC is expected to generate 1.61 times more return on investment than Union Bank. However, DFCC Bank is 1.61 times more volatile than Union Bank. It trades about 0.09 of its potential returns per unit of risk. Union Bank is currently generating about -0.19 per unit of risk. If you would invest 8,510 in DFCC Bank PLC on August 31, 2024 and sell it today you would earn a total of 250.00 from holding DFCC Bank PLC or generate 2.94% 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. Union Bank
Performance |
| Timeline |
| DFCC Bank PLC |
| Union Bank |
DFCC Bank and Union Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFCC Bank and Union Bank
The main advantage of trading using opposite DFCC Bank and Union Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFCC Bank position performs unexpectedly, Union 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 Union Bank will offset losses from the drop in Union Bank'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 |
| Union Bank vs. CEYLINCO INSURANCE PLC | Union Bank vs. Carson Cumberbatch PLC | Union Bank vs. Arpico Insurance | Union Bank vs. Pan Asia Banking |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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