Correlation Between Colombo Investment and Union Bank
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By analyzing existing cross correlation between Colombo Investment Trust and Union Bank, you can compare the effects of market volatilities on Colombo Investment and Union 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 Colombo Investment with a short position of Union Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colombo Investment and Union Bank.
Diversification Opportunities for Colombo Investment and Union Bank
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Colombo and Union is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Colombo Investment Trust and Union Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Bank and Colombo Investment 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 Colombo Investment Trust are associated (or correlated) with Union Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Bank has no effect on the direction of Colombo Investment i.e., Colombo Investment and Union Bank go up and down completely randomly.
Pair Corralation between Colombo Investment and Union Bank
Assuming the 90 days trading horizon Colombo Investment Trust is expected to generate 2.53 times more return on investment than Union Bank. However, Colombo Investment is 2.53 times more volatile than Union Bank. It trades about 0.05 of its potential returns per unit of risk. Union Bank is currently generating about 0.02 per unit of risk. If you would invest 10,000 in Colombo Investment Trust on September 25, 2024 and sell it today you would earn a total of 1,175 from holding Colombo Investment Trust or generate 11.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 38.89% |
Values | Daily Returns |
Colombo Investment Trust vs. Union Bank
Performance |
Timeline |
Colombo Investment Trust |
Union Bank |
Colombo Investment and Union Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Colombo Investment and Union Bank
The main advantage of trading using opposite Colombo Investment and Union Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colombo Investment position performs unexpectedly, Union 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 Union Bank will offset losses from the drop in Union Bank's long position.Colombo Investment vs. HNB Finance | Colombo Investment vs. Prime Lands Residencies | Colombo Investment vs. Jat Holdings PLC | Colombo Investment vs. Lanka Credit and |
Union Bank vs. HNB Finance | Union Bank vs. Prime Lands Residencies | Union Bank vs. Jat Holdings PLC | Union Bank vs. Lanka Credit and |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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