Correlation Between Coastal Carolina and PT Bank

Can any of the company-specific risk be diversified away by investing in both Coastal Carolina and PT Bank 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 PT Bank 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 PT Bank Central, you can compare the effects of market volatilities on Coastal Carolina and PT Bank 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 PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coastal Carolina and PT Bank.

Diversification Opportunities for Coastal Carolina and PT Bank

-0.6

Correlation Coefficient

Coastal Carolina  PT Bank

Excellent diversification

The 3 months correlation between Coastal and PBCRF is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Coastal Carolina Bancshares and PT Bank Central in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Central 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 PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Central has no effect on the direction of Coastal Carolina i.e., Coastal Carolina and PT Bank go up and down completely randomly.

Pair Corralation between Coastal Carolina and PT Bank

Given the investment horizon of 90 days Coastal Carolina Bancshares is expected to generate 0.13 times more return on investment than PT Bank. However, Coastal Carolina Bancshares is 7.45 times less risky than PT Bank. It trades about -0.3 of its potential returns per unit of risk. PT Bank Central is currently generating about -0.16 per unit of risk. If you would invest  1,108  in Coastal Carolina Bancshares on October 5, 2024 and sell it today you would lose (33.00) from holding Coastal Carolina Bancshares or give up 2.98% of portfolio value over 90 days.

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

Coastal Carolina Bancshares  vs.  PT Bank Central

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.

PT Bank Central

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Central has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Coastal Carolina and PT Bank

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

The idea behind Coastal Carolina Bancshares and PT Bank Central 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.