Correlation Between United Bancshares and Psychemedics

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

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

Diversification Opportunities for United Bancshares and Psychemedics

0.0

Correlation Coefficient

United Bancshares  Psychemedics

Pay attention - limited upside

The 3 months correlation between United and Psychemedics is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding United Bancshares and Psychemedics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Psychemedics and United 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 United Bancshares are associated (or correlated) with Psychemedics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Psychemedics has no effect on the direction of United Bancshares i.e., United Bancshares and Psychemedics go up and down completely randomly.

Pair Corralation between United Bancshares and Psychemedics

If you would invest (100.00) in Psychemedics on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Psychemedics or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

United Bancshares  vs.  Psychemedics

United Bancshares

Risk-Adjusted Performance

Very Weak

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

Psychemedics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Psychemedics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Psychemedics is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with United Bancshares and Psychemedics

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

The idea behind United Bancshares and Psychemedics 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.