Correlation Between Merchant Bank and Seylan Bank
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By analyzing existing cross correlation between Merchant Bank of and Seylan Bank PLC, you can compare the effects of market volatilities on Merchant Bank and Seylan 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 Merchant Bank with a short position of Seylan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merchant Bank and Seylan Bank.
Diversification Opportunities for Merchant Bank and Seylan Bank
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Merchant and Seylan is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Merchant Bank of and Seylan Bank PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seylan Bank PLC and Merchant 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 Merchant Bank of are associated (or correlated) with Seylan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seylan Bank PLC has no effect on the direction of Merchant Bank i.e., Merchant Bank and Seylan Bank go up and down completely randomly.
Pair Corralation between Merchant Bank and Seylan Bank
Assuming the 90 days trading horizon Merchant Bank of is expected to under-perform the Seylan Bank. But the stock apears to be less risky and, when comparing its historical volatility, Merchant Bank of is 1.03 times less risky than Seylan Bank. The stock trades about -0.16 of its potential returns per unit of risk. The Seylan Bank PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,190 in Seylan Bank PLC on August 28, 2024 and sell it today you would earn a total of 190.00 from holding Seylan Bank PLC or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merchant Bank of vs. Seylan Bank PLC
Performance |
| Timeline |
| Merchant Bank |
| Seylan Bank PLC |
Merchant Bank and Seylan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merchant Bank and Seylan Bank
The main advantage of trading using opposite Merchant Bank and Seylan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merchant Bank position performs unexpectedly, Seylan 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 Seylan Bank will offset losses from the drop in Seylan Bank's long position.| Merchant Bank vs. Hotel Sigiriya PLC | Merchant Bank vs. SERENDIB HOTELS PLC | Merchant Bank vs. Singhe Hospitals | Merchant Bank vs. Pegasus Hotels of |
| Seylan Bank vs. HATTON NATIONAL BANK | Seylan Bank vs. Nations Trust Bank | Seylan Bank vs. Amana Bank | Seylan Bank vs. Ceylon Tobacco |
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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