Correlation Between Pureun Mutual and Settlebank

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

By analyzing existing cross correlation between Pureun Mutual Savings and Settlebank, you can compare the effects of market volatilities on Pureun Mutual and Settlebank 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 Pureun Mutual with a short position of Settlebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pureun Mutual and Settlebank.

Diversification Opportunities for Pureun Mutual and Settlebank

-0.16

Correlation Coefficient

Pureun Mutual  Settlebank

Good diversification

The 3 months correlation between Pureun and Settlebank is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Pureun Mutual Savings and Settlebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Settlebank and Pureun Mutual 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 Pureun Mutual Savings are associated (or correlated) with Settlebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Settlebank has no effect on the direction of Pureun Mutual i.e., Pureun Mutual and Settlebank go up and down completely randomly.

Pair Corralation between Pureun Mutual and Settlebank

Assuming the 90 days trading horizon Pureun Mutual Savings is expected to generate 0.29 times more return on investment than Settlebank. However, Pureun Mutual Savings is 3.46 times less risky than Settlebank. It trades about -0.03 of its potential returns per unit of risk. Settlebank is currently generating about -0.18 per unit of risk. If you would invest  835,206  in Pureun Mutual Savings on October 22, 2024 and sell it today you would lose (2,206) from holding Pureun Mutual Savings or give up 0.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Pureun Mutual Savings  vs.  Settlebank

Pureun Mutual Savings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pureun Mutual Savings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Pureun Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Settlebank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Settlebank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Pureun Mutual and Settlebank

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

The idea behind Pureun Mutual Savings and Settlebank 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.