Correlation Between CCFNB Bancorp and First IC

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

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

Diversification Opportunities for CCFNB Bancorp and First IC

-0.6

Correlation Coefficient

CCFNB Bancorp  First IC

Excellent diversification

The 3 months correlation between CCFNB and First is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding CCFNB Bancorp and First IC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First IC and CCFNB 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 CCFNB Bancorp are associated (or correlated) with First IC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First IC has no effect on the direction of CCFNB Bancorp i.e., CCFNB Bancorp and First IC go up and down completely randomly.

Pair Corralation between CCFNB Bancorp and First IC

Given the investment horizon of 90 days CCFNB Bancorp is expected to generate 3.25 times less return on investment than First IC. But when comparing it to its historical volatility, CCFNB Bancorp is 1.43 times less risky than First IC. It trades about 0.02 of its potential returns per unit of risk. First IC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  800.00  in First IC on September 4, 2024 and sell it today you would earn a total of  125.00  from holding First IC or generate 15.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	75.36%
Values	Daily Returns

CCFNB Bancorp  vs.  First IC

CCFNB Bancorp

Risk-Adjusted Performance

6 of 100

Modest

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

First IC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CCFNB Bancorp and First IC

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

The idea behind CCFNB Bancorp and First IC 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.