Correlation Between Tal Lanka and HNB Finance
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By analyzing existing cross correlation between Tal Lanka Hotels and HNB Finance, you can compare the effects of market volatilities on Tal Lanka and HNB Finance 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 Tal Lanka with a short position of HNB Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tal Lanka and HNB Finance.
Diversification Opportunities for Tal Lanka and HNB Finance
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tal and HNB is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Tal Lanka Hotels and HNB Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNB Finance and Tal 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 Tal Lanka Hotels are associated (or correlated) with HNB Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HNB Finance has no effect on the direction of Tal Lanka i.e., Tal Lanka and HNB Finance go up and down completely randomly.
Pair Corralation between Tal Lanka and HNB Finance
Assuming the 90 days trading horizon Tal Lanka Hotels is expected to generate 0.96 times more return on investment than HNB Finance. However, Tal Lanka Hotels is 1.04 times less risky than HNB Finance. It trades about 0.2 of its potential returns per unit of risk. HNB Finance is currently generating about -0.16 per unit of risk. If you would invest 1,850 in Tal Lanka Hotels on August 28, 2024 and sell it today you would earn a total of 140.00 from holding Tal Lanka Hotels or generate 7.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tal Lanka Hotels vs. HNB Finance
Performance |
| Timeline |
| Tal Lanka Hotels |
| HNB Finance |
Tal Lanka and HNB Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tal Lanka and HNB Finance
The main advantage of trading using opposite Tal Lanka and HNB Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tal Lanka position performs unexpectedly, HNB Finance 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 HNB Finance will offset losses from the drop in HNB Finance's long position.| Tal Lanka vs. BROWNS INVESTMENTS PLC | Tal Lanka vs. Tangerine Beach Hotels | Tal Lanka vs. Ceylon Guardian Investment | Tal Lanka vs. Lanka Realty Investments |
| HNB Finance vs. Lanka Realty Investments | HNB Finance vs. Aitken Spence Hotel | HNB Finance vs. Serendib Hotels PLC | HNB Finance vs. Convenience Foods 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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