Correlation Between Chemung Financial and BayCom Corp

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

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

Diversification Opportunities for Chemung Financial and BayCom Corp

0.7

Correlation Coefficient

Chemung Financial  BayCom Corp

Poor diversification

The 3 months correlation between Chemung and BayCom is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Chemung Financial Corp and BayCom Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BayCom Corp and Chemung Financial 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 Chemung Financial Corp are associated (or correlated) with BayCom Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BayCom Corp has no effect on the direction of Chemung Financial i.e., Chemung Financial and BayCom Corp go up and down completely randomly.

Pair Corralation between Chemung Financial and BayCom Corp

Given the investment horizon of 90 days Chemung Financial Corp is expected to generate 1.21 times more return on investment than BayCom Corp. However, Chemung Financial is 1.21 times more volatile than BayCom Corp. It trades about 0.01 of its potential returns per unit of risk. BayCom Corp is currently generating about -0.05 per unit of risk. If you would invest  4,926  in Chemung Financial Corp on December 21, 2024 and sell it today you would lose (16.00) from holding Chemung Financial Corp or give up 0.32% of portfolio value over 90 days.

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

Chemung Financial Corp  vs.  BayCom Corp

Chemung Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chemung Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Chemung Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

BayCom Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days BayCom Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, BayCom Corp is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Chemung Financial and BayCom Corp

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

The idea behind Chemung Financial Corp and BayCom 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.

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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.