Correlation Between National Development and Peoples Insurance
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By analyzing existing cross correlation between National Development Bank and Peoples Insurance PLC, you can compare the effects of market volatilities on National Development and Peoples 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 Peoples Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Development and Peoples Insurance.
Diversification Opportunities for National Development and Peoples Insurance
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and Peoples is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding National Development Bank and Peoples Insurance PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Insurance PLC 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 Peoples Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Insurance PLC has no effect on the direction of National Development i.e., National Development and Peoples Insurance go up and down completely randomly.
Pair Corralation between National Development and Peoples Insurance
Assuming the 90 days trading horizon National Development Bank is expected to generate 0.92 times more return on investment than Peoples Insurance. However, National Development Bank is 1.09 times less risky than Peoples Insurance. It trades about 0.06 of its potential returns per unit of risk. Peoples Insurance PLC is currently generating about 0.01 per unit of risk. If you would invest 6,960 in National Development Bank on September 3, 2024 and sell it today you would earn a total of 1,480 from holding National Development Bank or generate 21.26% 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. Peoples Insurance PLC
Performance |
| Timeline |
| National Development Bank |
| Peoples Insurance PLC |
National Development and Peoples Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Development and Peoples Insurance
The main advantage of trading using opposite National Development and Peoples Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Development position performs unexpectedly, Peoples 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 Peoples Insurance will offset losses from the drop in Peoples Insurance's long position.| National Development vs. Lanka Credit and | National Development vs. VIDULLANKA PLC | National Development vs. Carson Cumberbatch PLC | National Development vs. Peoples Insurance PLC |
| Peoples Insurance vs. CEYLON HOSPITALS PLC | Peoples Insurance vs. Carson Cumberbatch PLC | Peoples Insurance vs. Distilleries Company of | Peoples Insurance vs. Citrus Leisure 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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