Correlation Between Southern BancShares and Delhi Bank

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

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

Diversification Opportunities for Southern BancShares and Delhi Bank

0.06

Correlation Coefficient

Southern BancShares  Delhi Bank

Significant diversification

The 3 months correlation between Southern and Delhi is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Southern BancShares NC and Delhi Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delhi Bank Corp and Southern 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 Southern BancShares NC are associated (or correlated) with Delhi Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delhi Bank Corp has no effect on the direction of Southern BancShares i.e., Southern BancShares and Delhi Bank go up and down completely randomly.

Pair Corralation between Southern BancShares and Delhi Bank

Given the investment horizon of 90 days Southern BancShares NC is expected to generate 14.58 times more return on investment than Delhi Bank. However, Southern BancShares is 14.58 times more volatile than Delhi Bank Corp. It trades about 0.22 of its potential returns per unit of risk. Delhi Bank Corp is currently generating about 0.06 per unit of risk. If you would invest  616,978  in Southern BancShares NC on September 21, 2024 and sell it today you would earn a total of  198,022  from holding Southern BancShares NC or generate 32.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Southern BancShares NC  vs.  Delhi Bank Corp

Southern BancShares

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Southern BancShares NC are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Southern BancShares exhibited solid returns over the last few months and may actually be approaching a breakup point.

Delhi Bank Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Delhi Bank Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Delhi Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Southern BancShares and Delhi Bank

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

The idea behind Southern BancShares NC and Delhi Bank 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.