Correlation Between Seylan Bank and John Keells
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By analyzing existing cross correlation between Seylan Bank PLC and John Keells Hotels, you can compare the effects of market volatilities on Seylan Bank and John Keells 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 John Keells. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seylan Bank and John Keells.
Diversification Opportunities for Seylan Bank and John Keells
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Seylan and John is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Seylan Bank PLC and John Keells Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Keells Hotels 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 John Keells. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Keells Hotels has no effect on the direction of Seylan Bank i.e., Seylan Bank and John Keells go up and down completely randomly.
Pair Corralation between Seylan Bank and John Keells
Assuming the 90 days trading horizon Seylan Bank PLC is expected to generate 1.13 times more return on investment than John Keells. However, Seylan Bank is 1.13 times more volatile than John Keells Hotels. It trades about 0.36 of its potential returns per unit of risk. John Keells Hotels is currently generating about 0.23 per unit of risk. If you would invest 4,420 in Seylan Bank PLC on September 17, 2024 and sell it today you would earn a total of 2,070 from holding Seylan Bank PLC or generate 46.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Seylan Bank PLC vs. John Keells Hotels
Performance |
Timeline |
Seylan Bank PLC |
John Keells Hotels |
Seylan Bank and John Keells Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Seylan Bank and John Keells
The main advantage of trading using opposite Seylan Bank and John Keells positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seylan Bank position performs unexpectedly, John Keells 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 John Keells will offset losses from the drop in John Keells' long position.Seylan Bank vs. Lighthouse Hotel PLC | Seylan Bank vs. SERENDIB HOTELS PLC | Seylan Bank vs. Union Chemicals Lanka | Seylan Bank vs. Sampath Bank PLC |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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