Correlation Between CCFNB Bancorp and Chesapeake Finl

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

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

Diversification Opportunities for CCFNB Bancorp and Chesapeake Finl

-0.34

Correlation Coefficient

CCFNB Bancorp  Chesapeake Finl

Very good diversification

The 3 months correlation between CCFNB and Chesapeake is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding CCFNB Bancorp and Chesapeake Finl Shs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Finl Shs and CCFNB Bancorp 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 CCFNB Bancorp are associated (or correlated) with Chesapeake Finl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Finl Shs has no effect on the direction of CCFNB Bancorp i.e., CCFNB Bancorp and Chesapeake Finl go up and down completely randomly.

Pair Corralation between CCFNB Bancorp and Chesapeake Finl

Given the investment horizon of 90 days CCFNB Bancorp is expected to generate 2.44 times less return on investment than Chesapeake Finl. In addition to that, CCFNB Bancorp is 1.37 times more volatile than Chesapeake Finl Shs. It trades about 0.02 of its total potential returns per unit of risk. Chesapeake Finl Shs is currently generating about 0.08 per unit of volatility. If you would invest  1,870  in Chesapeake Finl Shs on December 28, 2024 and sell it today you would earn a total of  105.00  from holding Chesapeake Finl Shs or generate 5.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

CCFNB Bancorp  vs.  Chesapeake Finl Shs

CCFNB Bancorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CCFNB Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, CCFNB Bancorp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Chesapeake Finl Shs

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chesapeake Finl Shs are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking signals, Chesapeake Finl is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CCFNB Bancorp and Chesapeake Finl

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

The idea behind CCFNB Bancorp and Chesapeake Finl Shs 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.