Correlation Between Century Next and CCSB Financial

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

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

Diversification Opportunities for Century Next and CCSB Financial

-0.78

Correlation Coefficient

Century Next  CCSB Financial

Pay attention - limited upside

The 3 months correlation between Century and CCSB is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Century Next Financial and CCSB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCSB Financial Corp and Century Next 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 Century Next Financial are associated (or correlated) with CCSB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCSB Financial Corp has no effect on the direction of Century Next i.e., Century Next and CCSB Financial go up and down completely randomly.

Pair Corralation between Century Next and CCSB Financial

Given the investment horizon of 90 days Century Next Financial is expected to generate 0.78 times more return on investment than CCSB Financial. However, Century Next Financial is 1.28 times less risky than CCSB Financial. It trades about 0.27 of its potential returns per unit of risk. CCSB Financial Corp is currently generating about -0.09 per unit of risk. If you would invest  3,375  in Century Next Financial on September 12, 2024 and sell it today you would earn a total of  456.00  from holding Century Next Financial or generate 13.51% return on investment over 90 days.

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

Century Next Financial  vs.  CCSB Financial Corp

Century Next Financial

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Century Next Financial are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Century Next showed solid returns over the last few months and may actually be approaching a breakup point.

CCSB Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CCSB Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CCSB Financial is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Century Next and CCSB Financial

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

The idea behind Century Next Financial and CCSB 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.

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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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.