Correlation Between SOUTHERN and Citizens Bancorp

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

By analyzing existing cross correlation between SOUTHERN PER CORP and Citizens Bancorp Investment, you can compare the effects of market volatilities on SOUTHERN and Citizens 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 with a short position of Citizens Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOUTHERN and Citizens Bancorp.

Diversification Opportunities for SOUTHERN and Citizens Bancorp

0.07

Correlation Coefficient

SOUTHERN  Citizens Bancorp

Significant diversification

The 3 months correlation between SOUTHERN and Citizens is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHERN PER CORP and Citizens Bancorp Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Bancorp Inv and SOUTHERN 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 PER CORP are associated (or correlated) with Citizens Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Bancorp Inv has no effect on the direction of SOUTHERN i.e., SOUTHERN and Citizens Bancorp go up and down completely randomly.

Pair Corralation between SOUTHERN and Citizens Bancorp

Assuming the 90 days trading horizon SOUTHERN PER CORP is expected to generate 31.59 times more return on investment than Citizens Bancorp. However, SOUTHERN is 31.59 times more volatile than Citizens Bancorp Investment. It trades about 0.04 of its potential returns per unit of risk. Citizens Bancorp Investment is currently generating about -0.05 per unit of risk. If you would invest  11,262  in SOUTHERN PER CORP on September 20, 2024 and sell it today you would earn a total of  162.00  from holding SOUTHERN PER CORP or generate 1.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.55%
Values	Daily Returns

SOUTHERN PER CORP  vs.  Citizens Bancorp Investment

SOUTHERN PER P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOUTHERN PER CORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SOUTHERN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Citizens Bancorp Inv

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Bancorp Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Citizens Bancorp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SOUTHERN and Citizens Bancorp

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

The idea behind SOUTHERN PER CORP and Citizens Bancorp Investment 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.