Correlation Between Sri Lanka and Dow Jones
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By analyzing existing cross correlation between Sri Lanka Telecom and Dow Jones Industrial, you can compare the effects of market volatilities on Sri Lanka and Dow Jones 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 Sri Lanka with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sri Lanka and Dow Jones.
Diversification Opportunities for Sri Lanka and Dow Jones
Weak diversification
The 3 months correlation between Sri and Dow is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sri Lanka Telecom and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Sri Lanka 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 Sri Lanka Telecom are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Sri Lanka i.e., Sri Lanka and Dow Jones go up and down completely randomly.
Pair Corralation between Sri Lanka and Dow Jones
Assuming the 90 days trading horizon Sri Lanka Telecom is expected to under-perform the Dow Jones. But the stock apears to be less risky and, when comparing its historical volatility, Sri Lanka Telecom is 1.12 times less risky than Dow Jones. The stock trades about -0.07 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 4,214,154 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 258,052 from holding Dow Jones Industrial or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Sri Lanka Telecom vs. Dow Jones Industrial
Performance |
| Timeline |
Sri Lanka and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Sri Lanka Telecom
Pair trading matchups for Sri Lanka
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Sri Lanka and Dow Jones
The main advantage of trading using opposite Sri Lanka and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sri Lanka position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Sri Lanka vs. HNB Finance | Sri Lanka vs. Prime Lands Residencies | Sri Lanka vs. Jat Holdings PLC | Sri Lanka vs. E M L |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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