Correlation Between Concepcion Industrial and Security Bank

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

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

Diversification Opportunities for Concepcion Industrial and Security Bank

0.67

Correlation Coefficient

Concepcion Industrial  Security Bank

Poor diversification

The 3 months correlation between Concepcion and Security is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Concepcion Industrial Corp and Security Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Bank Corp and Concepcion Industrial 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 Concepcion Industrial Corp are associated (or correlated) with Security Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security Bank Corp has no effect on the direction of Concepcion Industrial i.e., Concepcion Industrial and Security Bank go up and down completely randomly.

Pair Corralation between Concepcion Industrial and Security Bank

Assuming the 90 days trading horizon Concepcion Industrial Corp is expected to under-perform the Security Bank. But the stock apears to be less risky and, when comparing its historical volatility, Concepcion Industrial Corp is 1.77 times less risky than Security Bank. The stock trades about -0.04 of its potential returns per unit of risk. The Security Bank Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  8,057  in Security Bank Corp on September 18, 2024 and sell it today you would earn a total of  573.00  from holding Security Bank Corp or generate 7.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Concepcion Industrial Corp  vs.  Security Bank Corp

Concepcion Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Security Bank Corp

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Security Bank Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Security Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Concepcion Industrial and Security Bank

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

The idea behind Concepcion Industrial Corp and Security Bank 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.