Correlation Between Elmer Bancorp and CCSB Financial

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

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

Diversification Opportunities for Elmer Bancorp and CCSB Financial

-0.41

Correlation Coefficient

Elmer Bancorp  CCSB Financial

Very good diversification

The 3 months correlation between Elmer and CCSB is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Elmer Bancorp 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 Elmer 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 Elmer Bancorp 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 Elmer Bancorp i.e., Elmer Bancorp and CCSB Financial go up and down completely randomly.

Pair Corralation between Elmer Bancorp and CCSB Financial

Given the investment horizon of 90 days Elmer Bancorp is expected to generate 0.17 times more return on investment than CCSB Financial. However, Elmer Bancorp is 5.81 times less risky than CCSB Financial. It trades about 0.12 of its potential returns per unit of risk. CCSB Financial Corp is currently generating about -0.2 per unit of risk. If you would invest  2,150  in Elmer Bancorp on September 28, 2024 and sell it today you would earn a total of  25.00  from holding Elmer Bancorp or generate 1.16% return on investment over 90 days.

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

Elmer Bancorp  vs.  CCSB Financial Corp

Elmer Bancorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Elmer Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Elmer Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 abnormal performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Elmer Bancorp and CCSB Financial

The main advantage of trading using opposite Elmer Bancorp and CCSB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elmer Bancorp 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 Elmer Bancorp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.