Correlation Between Security Bank and Century Pacific

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

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

Diversification Opportunities for Security Bank and Century Pacific

-0.55

Correlation Coefficient

Security Bank  Century Pacific

Excellent diversification

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

Pair Corralation between Security Bank and Century Pacific

Assuming the 90 days trading horizon Security Bank Corp is expected to generate 0.8 times more return on investment than Century Pacific. However, Security Bank Corp is 1.25 times less risky than Century Pacific. It trades about 0.0 of its potential returns per unit of risk. Century Pacific Food is currently generating about -0.02 per unit of risk. If you would invest  8,500  in Security Bank Corp on October 5, 2024 and sell it today you would lose (25.00) from holding Security Bank Corp or give up 0.29% of portfolio value over 90 days.

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

Security Bank Corp  vs.  Century Pacific Food

Security Bank Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Security Bank Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Century Pacific Food

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Century Pacific Food has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively unsteady basic indicators, Century Pacific may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Security Bank and Century Pacific

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

The idea behind Security Bank Corp and Century Pacific Food 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.