Correlation Between PSB Holdings and Greenville Federal

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Can any of the company-specific risk be diversified away by investing in both PSB Holdings and Greenville Federal 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 PSB Holdings and Greenville Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PSB Holdings and Greenville Federal Financial, you can compare the effects of market volatilities on PSB Holdings and Greenville Federal 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 PSB Holdings with a short position of Greenville Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of PSB Holdings and Greenville Federal.

Diversification Opportunities for PSB Holdings and Greenville Federal

-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between PSB and Greenville is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding PSB Holdings and Greenville Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenville Federal and PSB Holdings 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 PSB Holdings are associated (or correlated) with Greenville Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenville Federal has no effect on the direction of PSB Holdings i.e., PSB Holdings and Greenville Federal go up and down completely randomly.

Pair Corralation between PSB Holdings and Greenville Federal

Given the investment horizon of 90 days PSB Holdings is expected to generate 0.36 times more return on investment than Greenville Federal. However, PSB Holdings is 2.8 times less risky than Greenville Federal. It trades about 0.08 of its potential returns per unit of risk. Greenville Federal Financial is currently generating about 0.02 per unit of risk. If you would invest  2,180  in PSB Holdings on October 5, 2024 and sell it today you would earn a total of  470.00  from holding PSB Holdings or generate 21.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy88.0%
ValuesDaily Returns

PSB Holdings  vs.  Greenville Federal Financial

 Performance 
       Timeline  
PSB Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PSB Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, PSB Holdings is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.
Greenville Federal 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Greenville Federal Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Greenville Federal is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

PSB Holdings and Greenville Federal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PSB Holdings and Greenville Federal

The main advantage of trading using opposite PSB Holdings and Greenville Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PSB Holdings position performs unexpectedly, Greenville Federal 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 Greenville Federal will offset losses from the drop in Greenville Federal's long position.
The idea behind PSB Holdings and Greenville Federal Financial 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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