Correlation Between First CommunityPFD and Apollo Bancorp

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

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

Diversification Opportunities for First CommunityPFD and Apollo Bancorp

-0.71

Correlation Coefficient

First CommunityPFD  Apollo Bancorp

Pay attention - limited upside

The 3 months correlation between First and Apollo is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding First Community and Apollo Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Bancorp and First CommunityPFD 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 First Community are associated (or correlated) with Apollo Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Bancorp has no effect on the direction of First CommunityPFD i.e., First CommunityPFD and Apollo Bancorp go up and down completely randomly.

Pair Corralation between First CommunityPFD and Apollo Bancorp

Assuming the 90 days horizon First Community is expected to under-perform the Apollo Bancorp. But the pink sheet apears to be less risky and, when comparing its historical volatility, First Community is 8.53 times less risky than Apollo Bancorp. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Apollo Bancorp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,400  in Apollo Bancorp on December 28, 2024 and sell it today you would earn a total of  600.00  from holding Apollo Bancorp or generate 17.65% return on investment over 90 days.

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

First Community  vs.  Apollo Bancorp

First CommunityPFD

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Community has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, First CommunityPFD is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Apollo Bancorp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Bancorp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Apollo Bancorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First CommunityPFD and Apollo Bancorp

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

The idea behind First Community and Apollo Bancorp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.