Correlation Between Harford Bank and CCSB Financial

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

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

Diversification Opportunities for Harford Bank and CCSB Financial

-0.31

Correlation Coefficient

Harford Bank  CCSB Financial

Very good diversification

The 3 months correlation between Harford and CCSB is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Harford Bank and CCSB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCSB Financial Corp and Harford Bank 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 Harford Bank are associated (or correlated) with CCSB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCSB Financial Corp has no effect on the direction of Harford Bank i.e., Harford Bank and CCSB Financial go up and down completely randomly.

Pair Corralation between Harford Bank and CCSB Financial

Given the investment horizon of 90 days Harford Bank is expected to under-perform the CCSB Financial. In addition to that, Harford Bank is 1.29 times more volatile than CCSB Financial Corp. It trades about -0.19 of its total potential returns per unit of risk. CCSB Financial Corp is currently generating about 0.28 per unit of volatility. If you would invest  1,162  in CCSB Financial Corp on September 19, 2024 and sell it today you would earn a total of  28.00  from holding CCSB Financial Corp or generate 2.41% return on investment over 90 days.

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

Harford Bank  vs.  CCSB Financial Corp

Harford Bank

Risk-Adjusted Performance

0 of 100

Very Weak

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

CCSB Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CCSB Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CCSB Financial is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Harford Bank and CCSB Financial

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

The idea behind Harford Bank and CCSB Financial Corp 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.

Check out your portfolio center.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.