Correlation Between Coastal Carolina and Main Street

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

By analyzing existing cross correlation between Coastal Carolina Bancshares and Main Street Financial, you can compare the effects of market volatilities on Coastal Carolina and Main Street 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 Coastal Carolina with a short position of Main Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coastal Carolina and Main Street.

Diversification Opportunities for Coastal Carolina and Main Street

0.4

Correlation Coefficient

Coastal Carolina  Main Street

Very weak diversification

The 3 months correlation between Coastal and Main is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Coastal Carolina Bancshares and Main Street Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Street Financial and Coastal Carolina 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 Coastal Carolina Bancshares are associated (or correlated) with Main Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Street Financial has no effect on the direction of Coastal Carolina i.e., Coastal Carolina and Main Street go up and down completely randomly.

Pair Corralation between Coastal Carolina and Main Street

Given the investment horizon of 90 days Coastal Carolina Bancshares is expected to under-perform the Main Street. But the otc stock apears to be less risky and, when comparing its historical volatility, Coastal Carolina Bancshares is 3.03 times less risky than Main Street. The otc stock trades about 0.0 of its potential returns per unit of risk. The Main Street Financial is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,667  in Main Street Financial on October 6, 2024 and sell it today you would lose (236.00) from holding Main Street Financial or give up 14.16% of portfolio value over 90 days.

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

Coastal Carolina Bancshares  vs.  Main Street Financial

Coastal Carolina Ban

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coastal Carolina Bancshares are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Coastal Carolina may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Main Street Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Main Street Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Main Street is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Coastal Carolina and Main Street

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

The idea behind Coastal Carolina Bancshares and Main Street Financial 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.