Correlation Between Killbuck Bancshares and Century Financial

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

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

Diversification Opportunities for Killbuck Bancshares and Century Financial

0.33

Correlation Coefficient

Killbuck Bancshares  Century Financial

Weak diversification

The 3 months correlation between Killbuck and Century is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Killbuck Bancshares and Century Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Financial Corp and Killbuck Bancshares 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 Killbuck Bancshares are associated (or correlated) with Century Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Financial Corp has no effect on the direction of Killbuck Bancshares i.e., Killbuck Bancshares and Century Financial go up and down completely randomly.

Pair Corralation between Killbuck Bancshares and Century Financial

Given the investment horizon of 90 days Killbuck Bancshares is expected to generate 4.45 times more return on investment than Century Financial. However, Killbuck Bancshares is 4.45 times more volatile than Century Financial Corp. It trades about 0.07 of its potential returns per unit of risk. Century Financial Corp is currently generating about 0.2 per unit of risk. If you would invest  10,800  in Killbuck Bancshares on December 27, 2024 and sell it today you would earn a total of  1,702  from holding Killbuck Bancshares or generate 15.76% return on investment over 90 days.

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

Killbuck Bancshares  vs.  Century Financial Corp

Killbuck Bancshares

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Killbuck Bancshares are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile forward indicators, Killbuck Bancshares sustained solid returns over the last few months and may actually be approaching a breakup point.

Century Financial Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Century Financial Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Century Financial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Killbuck Bancshares and Century Financial

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

The idea behind Killbuck Bancshares and Century 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.