Correlation Between CCSB Financial and Foreign Trade

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

By analyzing existing cross correlation between CCSB Financial Corp and Foreign Trade Bank, you can compare the effects of market volatilities on CCSB Financial and Foreign Trade 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 CCSB Financial with a short position of Foreign Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCSB Financial and Foreign Trade.

Diversification Opportunities for CCSB Financial and Foreign Trade

-0.53

Correlation Coefficient

CCSB Financial  Foreign Trade

Excellent diversification

The 3 months correlation between CCSB and Foreign is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding CCSB Financial Corp and Foreign Trade Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Trade Bank and CCSB Financial 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 CCSB Financial Corp are associated (or correlated) with Foreign Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Trade Bank has no effect on the direction of CCSB Financial i.e., CCSB Financial and Foreign Trade go up and down completely randomly.

Pair Corralation between CCSB Financial and Foreign Trade

Given the investment horizon of 90 days CCSB Financial Corp is expected to under-perform the Foreign Trade. But the pink sheet apears to be less risky and, when comparing its historical volatility, CCSB Financial Corp is 3.08 times less risky than Foreign Trade. The pink sheet trades about -0.25 of its potential returns per unit of risk. The Foreign Trade Bank is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  3,579  in Foreign Trade Bank on October 25, 2024 and sell it today you would earn a total of  208.00  from holding Foreign Trade Bank or generate 5.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CCSB Financial Corp  vs.  Foreign Trade Bank

CCSB Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CCSB Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Foreign Trade Bank

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Foreign Trade Bank are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, Foreign Trade showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CCSB Financial and Foreign Trade

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

The idea behind CCSB Financial Corp and Foreign Trade Bank 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.