Correlation Between HNB Finance and Alliance Finance
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By analyzing existing cross correlation between HNB Finance and Alliance Finance, you can compare the effects of market volatilities on HNB Finance 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 HNB Finance with a short position of Alliance Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of HNB Finance and Alliance Finance.
Diversification Opportunities for HNB Finance and Alliance Finance
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HNB and Alliance is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding HNB Finance and Alliance Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Finance and HNB Finance 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 HNB Finance 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 HNB Finance i.e., HNB Finance and Alliance Finance go up and down completely randomly.
Pair Corralation between HNB Finance and Alliance Finance
Assuming the 90 days trading horizon HNB Finance is expected to under-perform the Alliance Finance. In addition to that, HNB Finance is 1.02 times more volatile than Alliance Finance. It trades about -0.03 of its total potential returns per unit of risk. Alliance Finance is currently generating about 0.23 per unit of volatility. If you would invest 11,500 in Alliance Finance on August 24, 2024 and sell it today you would earn a total of 1,100 from holding Alliance Finance or generate 9.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HNB Finance vs. Alliance Finance
Performance |
| Timeline |
| HNB Finance |
| Alliance Finance |
HNB Finance and Alliance Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HNB Finance and Alliance Finance
The main advantage of trading using opposite HNB Finance and Alliance Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HNB Finance 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.| HNB Finance vs. Renuka City Hotel | HNB Finance vs. CEYLINCO INSURANCE PLC | HNB Finance vs. Ceylon Hotels | HNB Finance vs. Eden Hotel Lanka |
| Alliance Finance vs. Hatton National Bank | Alliance Finance vs. DFCC Bank PLC | Alliance Finance vs. Arpico Insurance | Alliance Finance vs. CEYLINCO INSURANCE 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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