Correlation Between Commercial National and Century Financial

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

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

Diversification Opportunities for Commercial National and Century Financial

0.27

Correlation Coefficient

Commercial National  Century Financial

Modest diversification

The 3 months correlation between Commercial and Century is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Commercial National Financial and Century Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Financial Corp and Commercial National 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 Commercial National Financial are associated (or correlated) with Century Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Financial Corp has no effect on the direction of Commercial National i.e., Commercial National and Century Financial go up and down completely randomly.

Pair Corralation between Commercial National and Century Financial

Given the investment horizon of 90 days Commercial National is expected to generate 7.31 times less return on investment than Century Financial. In addition to that, Commercial National is 1.01 times more volatile than Century Financial Corp. It trades about 0.03 of its total potential returns per unit of risk. Century Financial Corp is currently generating about 0.2 per unit of volatility. If you would invest  3,840  in Century Financial Corp on December 30, 2024 and sell it today you would earn a total of  856.00  from holding Century Financial Corp or generate 22.29% return on investment over 90 days.

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

Commercial National Financial  vs.  Century Financial Corp

Commercial National

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Commercial National Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Commercial National is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Century Financial Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Century Financial Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Century Financial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Commercial National and Century Financial

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

The idea behind Commercial National Financial and Century Financial Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.