Correlation Between Chemung Financial and Southern Missouri

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

Diversification Opportunities for Chemung Financial and Southern Missouri

0.81

Correlation Coefficient

Chemung Financial  Southern Missouri

Very poor diversification

The 3 months correlation between Chemung and Southern is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Chemung Financial Corp and Southern Missouri Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Missouri Bancorp 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 Southern Missouri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Missouri Bancorp has no effect on the direction of Chemung Financial i.e., Chemung Financial and Southern Missouri go up and down completely randomly.

Pair Corralation between Chemung Financial and Southern Missouri

Given the investment horizon of 90 days Chemung Financial Corp is expected to generate 0.93 times more return on investment than Southern Missouri. However, Chemung Financial Corp is 1.07 times less risky than Southern Missouri. It trades about -0.16 of its potential returns per unit of risk. Southern Missouri Bancorp is currently generating about -0.37 per unit of risk. If you would invest  5,201  in Chemung Financial Corp on September 29, 2024 and sell it today you would lose (261.00) from holding Chemung Financial Corp or give up 5.02% of portfolio value over 90 days.

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

Chemung Financial Corp  vs.  Southern Missouri Bancorp

Chemung Financial Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chemung Financial Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Southern Missouri Bancorp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Missouri Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Southern Missouri 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 Southern Missouri

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

The idea behind Chemung Financial Corp and Southern Missouri Bancorp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.