Correlation Between SEYLAN BANK and Chemanex PLC

Can any of the company-specific risk be diversified away by investing in both SEYLAN BANK and Chemanex PLC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SEYLAN BANK and Chemanex PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SEYLAN BANK PLC and Chemanex PLC, you can compare the effects of market volatilities on SEYLAN BANK and Chemanex PLC 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 Chemanex PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEYLAN BANK and Chemanex PLC.

Diversification Opportunities for SEYLAN BANK and Chemanex PLC

0.54

Correlation Coefficient

SEYLAN BANK  Chemanex PLC

Very weak diversification

The 3 months correlation between SEYLAN and Chemanex is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding SEYLAN BANK PLC and Chemanex PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemanex PLC 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 Chemanex PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemanex PLC has no effect on the direction of SEYLAN BANK i.e., SEYLAN BANK and Chemanex PLC go up and down completely randomly.

Pair Corralation between SEYLAN BANK and Chemanex PLC

Assuming the 90 days trading horizon SEYLAN BANK PLC is expected to generate 0.81 times more return on investment than Chemanex PLC. However, SEYLAN BANK PLC is 1.23 times less risky than Chemanex PLC. It trades about -0.01 of its potential returns per unit of risk. Chemanex PLC is currently generating about -0.05 per unit of risk. If you would invest  5,430  in SEYLAN BANK PLC on December 28, 2024 and sell it today you would lose (160.00) from holding SEYLAN BANK PLC or give up 2.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.25%
Values	Daily Returns

SEYLAN BANK PLC  vs.  Chemanex PLC

SEYLAN BANK PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days SEYLAN BANK PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SEYLAN BANK is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Chemanex PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chemanex PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with SEYLAN BANK and Chemanex PLC

The main advantage of trading using opposite SEYLAN BANK and Chemanex PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEYLAN BANK position performs unexpectedly, Chemanex PLC 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 Chemanex PLC will offset losses from the drop in Chemanex PLC's long position.

The idea behind SEYLAN BANK PLC and Chemanex PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.