Correlation Between 1ST SUMMIT and CCFNB Bancorp

Can any of the company-specific risk be diversified away by investing in both 1ST SUMMIT and CCFNB 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 1ST SUMMIT and CCFNB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1ST SUMMIT BANCORP and CCFNB Bancorp, you can compare the effects of market volatilities on 1ST SUMMIT and CCFNB 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 1ST SUMMIT with a short position of CCFNB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1ST SUMMIT and CCFNB Bancorp.

Diversification Opportunities for 1ST SUMMIT and CCFNB Bancorp

-0.68

Correlation Coefficient

1ST SUMMIT  CCFNB Bancorp

Excellent diversification

The 3 months correlation between 1ST and CCFNB is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding 1ST SUMMIT BANCORP and CCFNB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCFNB Bancorp and 1ST SUMMIT 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 1ST SUMMIT BANCORP are associated (or correlated) with CCFNB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCFNB Bancorp has no effect on the direction of 1ST SUMMIT i.e., 1ST SUMMIT and CCFNB Bancorp go up and down completely randomly.

Pair Corralation between 1ST SUMMIT and CCFNB Bancorp

Given the investment horizon of 90 days 1ST SUMMIT is expected to generate 33.05 times less return on investment than CCFNB Bancorp. But when comparing it to its historical volatility, 1ST SUMMIT BANCORP is 1.19 times less risky than CCFNB Bancorp. It trades about 0.01 of its potential returns per unit of risk. CCFNB Bancorp is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  3,701  in CCFNB Bancorp on October 6, 2024 and sell it today you would earn a total of  599.00  from holding CCFNB Bancorp or generate 16.18% return on investment over 90 days.

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

1ST SUMMIT BANCORP  vs.  CCFNB Bancorp

1ST SUMMIT BANCORP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1ST SUMMIT BANCORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, 1ST SUMMIT is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

CCFNB Bancorp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CCFNB Bancorp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, CCFNB Bancorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 1ST SUMMIT and CCFNB Bancorp

The main advantage of trading using opposite 1ST SUMMIT and CCFNB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1ST SUMMIT position performs unexpectedly, CCFNB 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 CCFNB Bancorp will offset losses from the drop in CCFNB Bancorp's long position.

The idea behind 1ST SUMMIT BANCORP and CCFNB 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..