Correlation Between Senkadagala Finance and PEOPLES LEASING

Can any of the company-specific risk be diversified away by investing in both Senkadagala Finance and PEOPLES LEASING 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 Senkadagala Finance and PEOPLES LEASING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Senkadagala Finance PLC and PEOPLES LEASING FINANCE, you can compare the effects of market volatilities on Senkadagala Finance and PEOPLES LEASING 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 Senkadagala Finance with a short position of PEOPLES LEASING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senkadagala Finance and PEOPLES LEASING.

Diversification Opportunities for Senkadagala Finance and PEOPLES LEASING

-0.6

Correlation Coefficient

Senkadagala Finance  PEOPLES LEASING

Excellent diversification

The 3 months correlation between Senkadagala and PEOPLES is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Senkadagala Finance PLC and PEOPLES LEASING FINANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEOPLES LEASING FINANCE and Senkadagala Finance 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 Senkadagala Finance PLC are associated (or correlated) with PEOPLES LEASING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEOPLES LEASING FINANCE has no effect on the direction of Senkadagala Finance i.e., Senkadagala Finance and PEOPLES LEASING go up and down completely randomly.

Pair Corralation between Senkadagala Finance and PEOPLES LEASING

Assuming the 90 days trading horizon Senkadagala Finance is expected to generate 1.84 times less return on investment than PEOPLES LEASING. But when comparing it to its historical volatility, Senkadagala Finance PLC is 1.12 times less risky than PEOPLES LEASING. It trades about 0.2 of its potential returns per unit of risk. PEOPLES LEASING FINANCE is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  1,090  in PEOPLES LEASING FINANCE on September 15, 2024 and sell it today you would earn a total of  410.00  from holding PEOPLES LEASING FINANCE or generate 37.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	40.0%
Values	Daily Returns

Senkadagala Finance PLC  vs.  PEOPLES LEASING FINANCE

Senkadagala Finance PLC

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Senkadagala Finance PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Senkadagala Finance sustained solid returns over the last few months and may actually be approaching a breakup point.

PEOPLES LEASING FINANCE

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in PEOPLES LEASING FINANCE are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PEOPLES LEASING sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Senkadagala Finance and PEOPLES LEASING

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

The idea behind Senkadagala Finance PLC and PEOPLES LEASING FINANCE 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.