Correlation Between Century Financial and CNB

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

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

Diversification Opportunities for Century Financial and CNB

-0.9

Correlation Coefficient

Century Financial  CNB

Pay attention - limited upside

The 3 months correlation between Century and CNB is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Century Financial Corp and CNB Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNB Corporation and Century 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 Century Financial Corp are associated (or correlated) with CNB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNB Corporation has no effect on the direction of Century Financial i.e., Century Financial and CNB go up and down completely randomly.

Pair Corralation between Century Financial and CNB

Given the investment horizon of 90 days Century Financial Corp is expected to generate 3.63 times more return on investment than CNB. However, Century Financial is 3.63 times more volatile than CNB Corporation. It trades about 0.11 of its potential returns per unit of risk. CNB Corporation is currently generating about -0.25 per unit of risk. If you would invest  3,336  in Century Financial Corp on September 15, 2024 and sell it today you would earn a total of  414.00  from holding Century Financial Corp or generate 12.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	93.75%
Values	Daily Returns

Century Financial Corp  vs.  CNB Corp.

Century Financial Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Century Financial Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Century Financial disclosed solid returns over the last few months and may actually be approaching a breakup point.

CNB Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNB Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Century Financial and CNB

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

The idea behind Century Financial Corp and CNB Corporation 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.