Correlation Between Chemung Financial and Dimeco

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

Diversification Opportunities for Chemung Financial and Dimeco

0.41

Correlation Coefficient

Chemung Financial  Dimeco

Very weak diversification

The 3 months correlation between Chemung and Dimeco is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Chemung Financial Corp and Dimeco Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimeco Inc 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 Dimeco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimeco Inc has no effect on the direction of Chemung Financial i.e., Chemung Financial and Dimeco go up and down completely randomly.

Pair Corralation between Chemung Financial and Dimeco

Given the investment horizon of 90 days Chemung Financial Corp is expected to under-perform the Dimeco. But the stock apears to be less risky and, when comparing its historical volatility, Chemung Financial Corp is 1.54 times less risky than Dimeco. The stock trades about -0.27 of its potential returns per unit of risk. The Dimeco Inc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,850  in Dimeco Inc on October 26, 2024 and sell it today you would earn a total of  295.00  from holding Dimeco Inc or generate 7.66% return on investment over 90 days.

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

Chemung Financial Corp  vs.  Dimeco Inc

Chemung Financial Corp

Risk-Adjusted Performance

0 of 100

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.

Dimeco Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dimeco Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Dimeco is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Chemung Financial and Dimeco

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

The idea behind Chemung Financial Corp and Dimeco Inc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.