Correlation Between Highlands Bankshares and First Bankers

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

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

Diversification Opportunities for Highlands Bankshares and First Bankers

0.75

Correlation Coefficient

Highlands Bankshares  First Bankers

Poor diversification

The 3 months correlation between Highlands and First is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Highlands Bankshares and First Bankers Trustshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bankers Trustshares and Highlands Bankshares 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 Highlands Bankshares are associated (or correlated) with First Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bankers Trustshares has no effect on the direction of Highlands Bankshares i.e., Highlands Bankshares and First Bankers go up and down completely randomly.

Pair Corralation between Highlands Bankshares and First Bankers

Given the investment horizon of 90 days Highlands Bankshares is expected to generate 0.75 times more return on investment than First Bankers. However, Highlands Bankshares is 1.33 times less risky than First Bankers. It trades about 0.02 of its potential returns per unit of risk. First Bankers Trustshares is currently generating about -0.01 per unit of risk. If you would invest  3,275  in Highlands Bankshares on October 5, 2024 and sell it today you would earn a total of  7.00  from holding Highlands Bankshares or generate 0.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	85.0%
Values	Daily Returns

Highlands Bankshares  vs.  First Bankers Trustshares

Highlands Bankshares

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Highlands Bankshares are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Highlands Bankshares may actually be approaching a critical reversion point that can send shares even higher in February 2025.

First Bankers Trustshares

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Bankers Trustshares are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, First Bankers is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Highlands Bankshares and First Bankers

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

The idea behind Highlands Bankshares and First Bankers Trustshares 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.