Correlation Between SEYLAN BANK and THE KINGSBURY

Can any of the company-specific risk be diversified away by investing in both SEYLAN BANK and THE KINGSBURY 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 THE KINGSBURY 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 THE KINGSBURY PLC, you can compare the effects of market volatilities on SEYLAN BANK and THE KINGSBURY 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 THE KINGSBURY. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEYLAN BANK and THE KINGSBURY.

Diversification Opportunities for SEYLAN BANK and THE KINGSBURY

0.74

Correlation Coefficient

SEYLAN BANK  THE KINGSBURY

Poor diversification

The 3 months correlation between SEYLAN and THE is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding SEYLAN BANK PLC and THE KINGSBURY PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THE KINGSBURY 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 THE KINGSBURY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THE KINGSBURY PLC has no effect on the direction of SEYLAN BANK i.e., SEYLAN BANK and THE KINGSBURY go up and down completely randomly.

Pair Corralation between SEYLAN BANK and THE KINGSBURY

Assuming the 90 days trading horizon SEYLAN BANK PLC is expected to generate 1.06 times more return on investment than THE KINGSBURY. However, SEYLAN BANK is 1.06 times more volatile than THE KINGSBURY PLC. It trades about 0.07 of its potential returns per unit of risk. THE KINGSBURY PLC is currently generating about -0.04 per unit of risk. If you would invest  4,800  in SEYLAN BANK PLC on December 25, 2024 and sell it today you would earn a total of  400.00  from holding SEYLAN BANK PLC or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

SEYLAN BANK PLC  vs.  THE KINGSBURY PLC

SEYLAN BANK PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SEYLAN BANK PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SEYLAN BANK may actually be approaching a critical reversion point that can send shares even higher in April 2025.

THE KINGSBURY PLC

Risk-Adjusted Performance

Very Weak

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

Pair Trading with SEYLAN BANK and THE KINGSBURY

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

The idea behind SEYLAN BANK PLC and THE KINGSBURY 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.