Correlation Between DFCC Bank and Union Chemicals
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By analyzing existing cross correlation between DFCC Bank PLC and Union Chemicals Lanka, you can compare the effects of market volatilities on DFCC Bank and Union Chemicals 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 Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFCC Bank and Union Chemicals.
Diversification Opportunities for DFCC Bank and Union Chemicals
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DFCC and Union is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding DFCC Bank PLC and Union Chemicals Lanka in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Chemicals Lanka 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 Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Chemicals Lanka has no effect on the direction of DFCC Bank i.e., DFCC Bank and Union Chemicals go up and down completely randomly.
Pair Corralation between DFCC Bank and Union Chemicals
Assuming the 90 days trading horizon DFCC Bank PLC is expected to generate 4.13 times more return on investment than Union Chemicals. However, DFCC Bank is 4.13 times more volatile than Union Chemicals Lanka. It trades about 0.13 of its potential returns per unit of risk. Union Chemicals Lanka is currently generating about 0.0 per unit of risk. If you would invest 8,290 in DFCC Bank PLC on August 27, 2024 and sell it today you would earn a total of 330.00 from holding DFCC Bank PLC or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 89.47% |
| Values | Daily Returns |
DFCC Bank PLC vs. Union Chemicals Lanka
Performance |
| Timeline |
| DFCC Bank PLC |
| Union Chemicals Lanka |
DFCC Bank and Union Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFCC Bank and Union Chemicals
The main advantage of trading using opposite DFCC Bank and Union Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFCC Bank position performs unexpectedly, Union Chemicals 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 Chemicals will offset losses from the drop in Union Chemicals' 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 |
| Union Chemicals vs. Ceylinco Insurance PLC | Union Chemicals vs. Singhe Hospitals | Union Chemicals vs. Lanka Realty Investments | Union Chemicals vs. RENUKA FOODS 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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