Correlation Between Delhi Bank and Community Bankers

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

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

Diversification Opportunities for Delhi Bank and Community Bankers

-0.14

Correlation Coefficient

Delhi Bank  Community Bankers

Good diversification

The 3 months correlation between Delhi and Community is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Delhi Bank Corp and Community Bankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Bankers and Delhi Bank 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 Delhi Bank Corp are associated (or correlated) with Community Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Bankers has no effect on the direction of Delhi Bank i.e., Delhi Bank and Community Bankers go up and down completely randomly.

Pair Corralation between Delhi Bank and Community Bankers

Given the investment horizon of 90 days Delhi Bank is expected to generate 7.0 times less return on investment than Community Bankers. But when comparing it to its historical volatility, Delhi Bank Corp is 21.92 times less risky than Community Bankers. It trades about 0.12 of its potential returns per unit of risk. Community Bankers is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  525.00  in Community Bankers on December 29, 2024 and sell it today you would earn a total of  25.00  from holding Community Bankers or generate 4.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Delhi Bank Corp  vs.  Community Bankers

Delhi Bank Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delhi Bank Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Delhi Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Community Bankers

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Community Bankers are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Community Bankers may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Delhi Bank and Community Bankers

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

The idea behind Delhi Bank Corp and Community Bankers 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.

Check out your portfolio center.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.