Correlation Between Sri Lanka and Hatton National
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By analyzing existing cross correlation between Sri Lanka Telecom and Hatton National Bank, you can compare the effects of market volatilities on Sri Lanka and Hatton National 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 Hatton National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sri Lanka and Hatton National.
Diversification Opportunities for Sri Lanka and Hatton National
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sri and Hatton is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sri Lanka Telecom and Hatton National Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hatton National Bank 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 Hatton National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hatton National Bank has no effect on the direction of Sri Lanka i.e., Sri Lanka and Hatton National go up and down completely randomly.
Pair Corralation between Sri Lanka and Hatton National
Assuming the 90 days trading horizon Sri Lanka Telecom is expected to under-perform the Hatton National. But the stock apears to be less risky and, when comparing its historical volatility, Sri Lanka Telecom is 1.63 times less risky than Hatton National. The stock trades about -0.16 of its potential returns per unit of risk. The Hatton National Bank is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 21,575 in Hatton National Bank on August 24, 2024 and sell it today you would earn a total of 1,425 from holding Hatton National Bank or generate 6.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sri Lanka Telecom vs. Hatton National Bank
Performance |
| Timeline |
| Sri Lanka Telecom |
| Hatton National Bank |
Sri Lanka and Hatton National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sri Lanka and Hatton National
The main advantage of trading using opposite Sri Lanka and Hatton National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sri Lanka position performs unexpectedly, Hatton National 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 Hatton National will offset losses from the drop in Hatton National's long position.| Sri Lanka vs. Jat Holdings PLC | Sri Lanka vs. Lanka Credit and | Sri Lanka vs. Carson Cumberbatch PLC | Sri Lanka vs. Peoples Insurance PLC |
| Hatton National vs. HVA Foods PLC | Hatton National vs. Carson Cumberbatch PLC | Hatton National vs. Janashakthi Insurance | Hatton National vs. Peoples Insurance 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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