Correlation Between National Development and Janashakthi Insurance
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By analyzing existing cross correlation between National Development Bank and Janashakthi Insurance, you can compare the effects of market volatilities on National Development and Janashakthi Insurance 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 National Development with a short position of Janashakthi Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Development and Janashakthi Insurance.
Diversification Opportunities for National Development and Janashakthi Insurance
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and Janashakthi is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding National Development Bank and Janashakthi Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janashakthi Insurance and National Development 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 National Development Bank are associated (or correlated) with Janashakthi Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janashakthi Insurance has no effect on the direction of National Development i.e., National Development and Janashakthi Insurance go up and down completely randomly.
Pair Corralation between National Development and Janashakthi Insurance
Assuming the 90 days trading horizon National Development Bank is expected to under-perform the Janashakthi Insurance. But the stock apears to be less risky and, when comparing its historical volatility, National Development Bank is 1.53 times less risky than Janashakthi Insurance. The stock trades about -0.05 of its potential returns per unit of risk. The Janashakthi Insurance is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,410 in Janashakthi Insurance on August 27, 2024 and sell it today you would earn a total of 80.00 from holding Janashakthi Insurance or generate 1.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Development Bank vs. Janashakthi Insurance
Performance |
| Timeline |
| National Development Bank |
| Janashakthi Insurance |
National Development and Janashakthi Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Development and Janashakthi Insurance
The main advantage of trading using opposite National Development and Janashakthi Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Development position performs unexpectedly, Janashakthi Insurance 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 Janashakthi Insurance will offset losses from the drop in Janashakthi Insurance's long position.| National Development vs. RENUKA FOODS PLC | National Development vs. Asiri Surgical Hospital | National Development vs. Janashakthi Insurance | National Development vs. Lanka Milk Foods |
| Janashakthi Insurance vs. HVA Foods PLC | Janashakthi Insurance vs. Seylan Bank PLC | Janashakthi Insurance vs. Amaya Leisure PLC | Janashakthi Insurance vs. Ceylon Guardian Investment |
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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