Correlation Between First Community and Apollo Bancorp

Can any of the company-specific risk be diversified away by investing in both First Community 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 Community 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 Financial and Apollo Bancorp, you can compare the effects of market volatilities on First Community 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 Community with a short position of Apollo Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and Apollo Bancorp.

Diversification Opportunities for First Community and Apollo Bancorp

0.81

Correlation Coefficient

First Community  Apollo Bancorp

Very poor diversification

The 3 months correlation between First and Apollo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding First Community Financial and Apollo Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Bancorp and First Community 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 Financial 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 Community i.e., First Community and Apollo Bancorp go up and down completely randomly.

Pair Corralation between First Community and Apollo Bancorp

Given the investment horizon of 90 days First Community Financial is expected to under-perform the Apollo Bancorp. In addition to that, First Community is 2.22 times more volatile than Apollo Bancorp. It trades about -0.12 of its total potential returns per unit of risk. Apollo Bancorp is currently generating about -0.14 per unit of volatility. If you would invest  3,890  in Apollo Bancorp on September 16, 2024 and sell it today you would lose (390.00) from holding Apollo Bancorp or give up 10.03% of portfolio value over 90 days.

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

First Community Financial  vs.  Apollo Bancorp

First Community Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Community Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Apollo Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with First Community and Apollo Bancorp

The main advantage of trading using opposite First Community and Apollo Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Community 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 Financial 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.