Correlation Between Cincinnati Bancorp and Prime Meridian

Can any of the company-specific risk be diversified away by investing in both Cincinnati Bancorp and Prime Meridian 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 Cincinnati Bancorp and Prime Meridian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cincinnati Bancorp and Prime Meridian Holding, you can compare the effects of market volatilities on Cincinnati Bancorp and Prime Meridian 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 Cincinnati Bancorp with a short position of Prime Meridian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Bancorp and Prime Meridian.

Diversification Opportunities for Cincinnati Bancorp and Prime Meridian

0.0

Correlation Coefficient

Cincinnati Bancorp  Prime Meridian

Pay attention - limited upside

The 3 months correlation between Cincinnati and Prime is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Bancorp and Prime Meridian Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Meridian Holding and Cincinnati Bancorp 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 Cincinnati Bancorp are associated (or correlated) with Prime Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Meridian Holding has no effect on the direction of Cincinnati Bancorp i.e., Cincinnati Bancorp and Prime Meridian go up and down completely randomly.

Pair Corralation between Cincinnati Bancorp and Prime Meridian

If you would invest  2,864  in Prime Meridian Holding on December 4, 2024 and sell it today you would lose (14.00) from holding Prime Meridian Holding or give up 0.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Cincinnati Bancorp  vs.  Prime Meridian Holding

Cincinnati Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cincinnati Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cincinnati Bancorp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Prime Meridian Holding

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Cincinnati Bancorp and Prime Meridian

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

The idea behind Cincinnati Bancorp and Prime Meridian Holding 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.