Correlation Between Security Bank and Allhome Corp

Can any of the company-specific risk be diversified away by investing in both Security Bank and Allhome Corp 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 Allhome Corp 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 Allhome Corp, you can compare the effects of market volatilities on Security Bank and Allhome Corp 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 Allhome Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Security Bank and Allhome Corp.

Diversification Opportunities for Security Bank and Allhome Corp

0.7

Correlation Coefficient

Security Bank  Allhome Corp

Poor diversification

The 3 months correlation between Security and Allhome is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Security Bank Corp and Allhome Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allhome Corp 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 Allhome Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allhome Corp has no effect on the direction of Security Bank i.e., Security Bank and Allhome Corp go up and down completely randomly.

Pair Corralation between Security Bank and Allhome Corp

Assuming the 90 days trading horizon Security Bank Corp is expected to generate 1.16 times more return on investment than Allhome Corp. However, Security Bank is 1.16 times more volatile than Allhome Corp. It trades about 0.2 of its potential returns per unit of risk. Allhome Corp is currently generating about 0.02 per unit of risk. If you would invest  6,225  in Security Bank Corp on September 3, 2024 and sell it today you would earn a total of  2,455  from holding Security Bank Corp or generate 39.44% return on investment over 90 days.

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

Security Bank Corp  vs.  Allhome Corp

Security Bank Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Security Bank Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Security Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Allhome Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Allhome Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Allhome Corp is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Security Bank and Allhome Corp

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

The idea behind Security Bank Corp and Allhome 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.