Correlation Between South Atlantic and United Bancorporation

Can any of the company-specific risk be diversified away by investing in both South Atlantic and United Bancorporation 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 South Atlantic and United Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for South Atlantic and United Bancorporation

0.43

Correlation Coefficient

South Atlantic  United Bancorporation

Very weak diversification

The 3 months correlation between South and United is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding South Atlantic Bancshares and United Bancorp. of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bancorporation and South Atlantic 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 South Atlantic Bancshares are associated (or correlated) with United Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bancorporation has no effect on the direction of South Atlantic i.e., South Atlantic and United Bancorporation go up and down completely randomly.

Pair Corralation between South Atlantic and United Bancorporation

Given the investment horizon of 90 days South Atlantic Bancshares is expected to under-perform the United Bancorporation. But the otc stock apears to be less risky and, when comparing its historical volatility, South Atlantic Bancshares is 1.51 times less risky than United Bancorporation. The otc stock trades about -0.18 of its potential returns per unit of risk. The United Bancorporation of is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  5,649  in United Bancorporation of on December 5, 2024 and sell it today you would lose (109.00) from holding United Bancorporation of or give up 1.93% of portfolio value over 90 days.

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

South Atlantic Bancshares  vs.  United Bancorp. of

South Atlantic Bancshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days South Atlantic Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

United Bancorporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Bancorporation of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, United Bancorporation is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with South Atlantic and United Bancorporation

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

The idea behind South Atlantic Bancshares and United Bancorporation of 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.