Correlation Between Bank Of Georgia and Andover Bancorp

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

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

Diversification Opportunities for Bank Of Georgia and Andover Bancorp

0.79

Correlation Coefficient

Bank Of Georgia  Andover Bancorp

Poor diversification

The 3 months correlation between Bank and Andover is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bank Of Georgia and Andover Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andover Bancorp and Bank Of Georgia 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 Bank Of Georgia are associated (or correlated) with Andover Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andover Bancorp has no effect on the direction of Bank Of Georgia i.e., Bank Of Georgia and Andover Bancorp go up and down completely randomly.

Pair Corralation between Bank Of Georgia and Andover Bancorp

If you would invest  1,939  in Andover Bancorp on September 30, 2024 and sell it today you would earn a total of  61.00  from holding Andover Bancorp or generate 3.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Bank Of Georgia  vs.  Andover Bancorp

Bank Of Georgia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Of Georgia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Bank Of Georgia is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Andover Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Andover Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Andover Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bank Of Georgia and Andover Bancorp

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

The idea behind Bank Of Georgia and Andover Bancorp 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.