Correlation Between Merchant Bank and Sri Lanka
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By analyzing existing cross correlation between Merchant Bank of and Sri Lanka Telecom, you can compare the effects of market volatilities on Merchant 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 Merchant Bank with a short position of Sri Lanka. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merchant Bank and Sri Lanka.
Diversification Opportunities for Merchant Bank and Sri Lanka
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merchant and Sri is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Merchant Bank of 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 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 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 Merchant Bank i.e., Merchant Bank and Sri Lanka go up and down completely randomly.
Pair Corralation between Merchant Bank and Sri Lanka
Assuming the 90 days trading horizon Merchant Bank of is expected to generate 1.33 times more return on investment than Sri Lanka. However, Merchant Bank is 1.33 times more volatile than Sri Lanka Telecom. It trades about 0.04 of its potential returns per unit of risk. Sri Lanka Telecom is currently generating about 0.0 per unit of risk. If you would invest 360.00 in Merchant Bank of on August 27, 2024 and sell it today you would earn a total of 160.00 from holding Merchant Bank of or generate 44.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.31% |
| Values | Daily Returns |
Merchant Bank of vs. Sri Lanka Telecom
Performance |
| Timeline |
| Merchant Bank |
| Sri Lanka Telecom |
Merchant Bank and Sri Lanka Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merchant Bank and Sri Lanka
The main advantage of trading using opposite Merchant Bank and Sri Lanka positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merchant 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.| Merchant Bank vs. Hotel Sigiriya PLC | Merchant Bank vs. SERENDIB HOTELS PLC | Merchant Bank vs. Singhe Hospitals | Merchant Bank vs. Pegasus Hotels of |
| Sri Lanka vs. Browns Beach Hotels | Sri Lanka vs. Mahaweli Reach Hotel | Sri Lanka vs. CEYLINCO INSURANCE PLC | Sri Lanka vs. Lanka Realty Investments |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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