Correlation Between First CommunityPFD and Oconee Financial

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

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

Diversification Opportunities for First CommunityPFD and Oconee Financial

0.19

Correlation Coefficient

First CommunityPFD  Oconee Financial

Average diversification

The 3 months correlation between First and Oconee is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding First Community and Oconee Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oconee Financial 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 Oconee Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oconee Financial has no effect on the direction of First CommunityPFD i.e., First CommunityPFD and Oconee Financial go up and down completely randomly.

Pair Corralation between First CommunityPFD and Oconee Financial

If you would invest  925.00  in First Community on November 28, 2024 and sell it today you would earn a total of  0.00  from holding First Community or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

First Community  vs.  Oconee Financial

First CommunityPFD

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Community are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, First CommunityPFD is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Oconee Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oconee Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Oconee Financial is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with First CommunityPFD and Oconee Financial

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

The idea behind First Community and Oconee Financial 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.