Correlation Between Coastal Carolina and PSB Holdings

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

Diversification Opportunities for Coastal Carolina and PSB Holdings

0.72

Correlation Coefficient

Coastal Carolina  PSB Holdings

Poor diversification

The 3 months correlation between Coastal and PSB is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Coastal Carolina Bancshares and PSB Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSB Holdings 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 PSB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSB Holdings has no effect on the direction of Coastal Carolina i.e., Coastal Carolina and PSB Holdings go up and down completely randomly.

Pair Corralation between Coastal Carolina and PSB Holdings

Given the investment horizon of 90 days Coastal Carolina Bancshares is expected to under-perform the PSB Holdings. But the otc stock apears to be less risky and, when comparing its historical volatility, Coastal Carolina Bancshares is 1.84 times less risky than PSB Holdings. The otc stock trades about -0.37 of its potential returns per unit of risk. The PSB Holdings is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  2,750  in PSB Holdings on October 4, 2024 and sell it today you would lose (100.00) from holding PSB Holdings or give up 3.64% of portfolio value over 90 days.

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

Coastal Carolina Bancshares  vs.  PSB Holdings

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.

PSB Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PSB Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, PSB Holdings is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Coastal Carolina and PSB Holdings

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

The idea behind Coastal Carolina Bancshares and PSB Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.