Correlation Between Aozora Bank and Pioneer Bankcorp

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

By analyzing existing cross correlation between Aozora Bank Ltd and Pioneer Bankcorp, you can compare the effects of market volatilities on Aozora Bank and Pioneer Bankcorp 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 Aozora Bank with a short position of Pioneer Bankcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aozora Bank and Pioneer Bankcorp.

Diversification Opportunities for Aozora Bank and Pioneer Bankcorp

-0.58

Correlation Coefficient

Aozora Bank  Pioneer Bankcorp

Excellent diversification

The 3 months correlation between Aozora and Pioneer is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aozora Bank Ltd and Pioneer Bankcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Bankcorp and Aozora 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 Aozora Bank Ltd are associated (or correlated) with Pioneer Bankcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Bankcorp has no effect on the direction of Aozora Bank i.e., Aozora Bank and Pioneer Bankcorp go up and down completely randomly.

Pair Corralation between Aozora Bank and Pioneer Bankcorp

Assuming the 90 days horizon Aozora Bank Ltd is expected to under-perform the Pioneer Bankcorp. In addition to that, Aozora Bank is 2.04 times more volatile than Pioneer Bankcorp. It trades about -0.04 of its total potential returns per unit of risk. Pioneer Bankcorp is currently generating about 0.21 per unit of volatility. If you would invest  4,485  in Pioneer Bankcorp on September 20, 2024 and sell it today you would earn a total of  315.00  from holding Pioneer Bankcorp or generate 7.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Aozora Bank Ltd  vs.  Pioneer Bankcorp

Aozora Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aozora Bank Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Aozora Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pioneer Bankcorp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Bankcorp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward-looking signals, Pioneer Bankcorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aozora Bank and Pioneer Bankcorp

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

The idea behind Aozora Bank Ltd and Pioneer Bankcorp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.