Correlation Between Apollo Bancorp and Coastal Carolina

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

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

Diversification Opportunities for Apollo Bancorp and Coastal Carolina

-0.58

Correlation Coefficient

Apollo Bancorp  Coastal Carolina

Excellent diversification

The 3 months correlation between Apollo and Coastal is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Bancorp and Coastal Carolina Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coastal Carolina Ban and Apollo Bancorp 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 Apollo Bancorp are associated (or correlated) with Coastal Carolina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coastal Carolina Ban has no effect on the direction of Apollo Bancorp i.e., Apollo Bancorp and Coastal Carolina go up and down completely randomly.

Pair Corralation between Apollo Bancorp and Coastal Carolina

Given the investment horizon of 90 days Apollo Bancorp is expected to generate 3.89 times more return on investment than Coastal Carolina. However, Apollo Bancorp is 3.89 times more volatile than Coastal Carolina Bancshares. It trades about 0.02 of its potential returns per unit of risk. Coastal Carolina Bancshares is currently generating about 0.02 per unit of risk. If you would invest  3,702  in Apollo Bancorp on September 4, 2024 and sell it today you would earn a total of  33.00  from holding Apollo Bancorp or generate 0.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	64.65%
Values	Daily Returns

Apollo Bancorp  vs.  Coastal Carolina Bancshares

Apollo Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Apollo Bancorp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Coastal Carolina Ban

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coastal Carolina Bancshares are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Coastal Carolina sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apollo Bancorp and Coastal Carolina

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

The idea behind Apollo Bancorp and Coastal Carolina Bancshares 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.