Correlation Between Union Chemicals and DFCC Bank
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By analyzing existing cross correlation between Union Chemicals Lanka and DFCC Bank PLC, you can compare the effects of market volatilities on Union Chemicals 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 Union Chemicals with a short position of DFCC Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Chemicals and DFCC Bank.
Diversification Opportunities for Union Chemicals and DFCC Bank
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Union and DFCC is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Union Chemicals Lanka 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 Union Chemicals 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 Union Chemicals Lanka 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 Union Chemicals i.e., Union Chemicals and DFCC Bank go up and down completely randomly.
Pair Corralation between Union Chemicals and DFCC Bank
Assuming the 90 days trading horizon Union Chemicals is expected to generate 273.5 times less return on investment than DFCC Bank. But when comparing it to its historical volatility, Union Chemicals Lanka is 4.13 times less risky than DFCC Bank. It trades about 0.0 of its potential returns per unit of risk. DFCC Bank PLC is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 8,290 in DFCC Bank PLC on August 27, 2024 and sell it today you would earn a total of 330.00 from holding DFCC Bank PLC or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 89.47% |
| Values | Daily Returns |
Union Chemicals Lanka vs. DFCC Bank PLC
Performance |
| Timeline |
| Union Chemicals Lanka |
| DFCC Bank PLC |
Union Chemicals and DFCC Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Chemicals and DFCC Bank
The main advantage of trading using opposite Union Chemicals and DFCC Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Chemicals 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.| Union Chemicals vs. Ceylinco Insurance PLC | Union Chemicals vs. Singhe Hospitals | Union Chemicals vs. Lanka Realty Investments | Union Chemicals vs. RENUKA FOODS PLC |
| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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