Correlation Between CCSB Financial and Premier Financial

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

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

Diversification Opportunities for CCSB Financial and Premier Financial

-0.57

Correlation Coefficient

CCSB Financial  Premier Financial

Excellent diversification

The 3 months correlation between CCSB and Premier is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding CCSB Financial Corp and Premier Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Financial Corp and CCSB Financial 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 CCSB Financial Corp are associated (or correlated) with Premier Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Financial Corp has no effect on the direction of CCSB Financial i.e., CCSB Financial and Premier Financial go up and down completely randomly.

Pair Corralation between CCSB Financial and Premier Financial

Given the investment horizon of 90 days CCSB Financial Corp is expected to under-perform the Premier Financial. But the pink sheet apears to be less risky and, when comparing its historical volatility, CCSB Financial Corp is 4.8 times less risky than Premier Financial. The pink sheet trades about -0.24 of its potential returns per unit of risk. The Premier Financial Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,459  in Premier Financial Corp on August 30, 2024 and sell it today you would earn a total of  329.00  from holding Premier Financial Corp or generate 13.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

CCSB Financial Corp  vs.  Premier Financial Corp

CCSB Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CCSB Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Premier Financial Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Premier Financial Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Premier Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CCSB Financial and Premier Financial

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

The idea behind CCSB Financial Corp and Premier Financial 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.