Correlation Between First Keystone and OceanFirst Financial

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

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

Diversification Opportunities for First Keystone and OceanFirst Financial

0.88

Correlation Coefficient

First Keystone  OceanFirst Financial

Very poor diversification

The 3 months correlation between First and OceanFirst is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding First Keystone Corp and OceanFirst Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OceanFirst Financial Corp and First Keystone 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 First Keystone Corp are associated (or correlated) with OceanFirst Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OceanFirst Financial Corp has no effect on the direction of First Keystone i.e., First Keystone and OceanFirst Financial go up and down completely randomly.

Pair Corralation between First Keystone and OceanFirst Financial

Given the investment horizon of 90 days First Keystone Corp is expected to generate 6.68 times more return on investment than OceanFirst Financial. However, First Keystone is 6.68 times more volatile than OceanFirst Financial Corp. It trades about 0.21 of its potential returns per unit of risk. OceanFirst Financial Corp is currently generating about 0.11 per unit of risk. If you would invest  1,124  in First Keystone Corp on September 12, 2024 and sell it today you would earn a total of  528.00  from holding First Keystone Corp or generate 46.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

First Keystone Corp  vs.  OceanFirst Financial Corp

First Keystone Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Keystone Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, First Keystone unveiled solid returns over the last few months and may actually be approaching a breakup point.

OceanFirst Financial Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OceanFirst Financial Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, OceanFirst Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with First Keystone and OceanFirst Financial

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

The idea behind First Keystone Corp and OceanFirst 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..