Correlation Between Southern States and Home Bancorp

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Southern States and Home Bancorp 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 States and Home Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern States Bancshares and Home Bancorp, you can compare the effects of market volatilities on Southern States and Home Bancorp 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 States with a short position of Home Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern States and Home Bancorp.

Diversification Opportunities for Southern States and Home Bancorp

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between Southern and Home is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Southern States Bancshares and Home Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Bancorp and Southern States 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 States Bancshares are associated (or correlated) with Home Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Bancorp has no effect on the direction of Southern States i.e., Southern States and Home Bancorp go up and down completely randomly.

Pair Corralation between Southern States and Home Bancorp

Given the investment horizon of 90 days Southern States Bancshares is expected to under-perform the Home Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Southern States Bancshares is 1.08 times less risky than Home Bancorp. The stock trades about -0.01 of its potential returns per unit of risk. The Home Bancorp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,573  in Home Bancorp on December 28, 2024 and sell it today you would earn a total of  65.00  from holding Home Bancorp or generate 1.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Southern States Bancshares  vs.  Home Bancorp

 Performance 
       Timeline  
Southern States Banc 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Southern States Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Southern States is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Home Bancorp 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Home Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Home Bancorp is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Southern States and Home Bancorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Southern States and Home Bancorp

The main advantage of trading using opposite Southern States and Home Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern States position performs unexpectedly, Home Bancorp 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 Home Bancorp will offset losses from the drop in Home Bancorp's long position.
The idea behind Southern States Bancshares and Home Bancorp 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.
Check out your portfolio center.
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

Other Complementary Tools

Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Economic Indicators
Top statistical indicators that provide insights into how an economy is performing
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges