Correlation Between Seylan Bank and DFCC Bank
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By analyzing existing cross correlation between Seylan Bank PLC and DFCC Bank PLC, you can compare the effects of market volatilities on Seylan Bank and DFCC 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 Seylan Bank with a short position of DFCC Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seylan Bank and DFCC Bank.
Diversification Opportunities for Seylan Bank and DFCC Bank
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Seylan and DFCC is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Seylan Bank PLC and DFCC Bank PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFCC Bank PLC and Seylan 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 Seylan Bank PLC are associated (or correlated) with DFCC Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFCC Bank PLC has no effect on the direction of Seylan Bank i.e., Seylan Bank and DFCC Bank go up and down completely randomly.
Pair Corralation between Seylan Bank and DFCC Bank
Assuming the 90 days trading horizon Seylan Bank PLC is expected to generate 1.76 times more return on investment than DFCC Bank. However, Seylan Bank is 1.76 times more volatile than DFCC Bank PLC. It trades about 0.08 of its potential returns per unit of risk. DFCC Bank PLC is currently generating about 0.13 per unit of risk. If you would invest 5,190 in Seylan Bank PLC on August 27, 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seylan Bank PLC vs. DFCC Bank PLC
Performance |
| Timeline |
| Seylan Bank PLC |
| DFCC Bank PLC |
Seylan Bank and DFCC Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seylan Bank and DFCC Bank
The main advantage of trading using opposite Seylan Bank and DFCC Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seylan Bank position performs unexpectedly, DFCC 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 DFCC Bank will offset losses from the drop in DFCC Bank's long position.| Seylan Bank vs. HATTON NATIONAL BANK | Seylan Bank vs. Nations Trust Bank | Seylan Bank vs. Amana Bank | Seylan Bank vs. Ceylon Tobacco |
| DFCC Bank vs. CEYLON HOSPITALS PLC | DFCC Bank vs. RENUKA FOODS PLC | DFCC Bank vs. Lanka Milk Foods | DFCC Bank vs. Distilleries Company of |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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