Correlation Between Oconee Financial and United Bancorporation

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

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

Diversification Opportunities for Oconee Financial and United Bancorporation

0.78

Correlation Coefficient

Oconee Financial  United Bancorporation

Poor diversification

The 3 months correlation between Oconee and United is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Oconee Financial and United Bancorp. of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bancorporation and Oconee 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 Oconee Financial are associated (or correlated) with United Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bancorporation has no effect on the direction of Oconee Financial i.e., Oconee Financial and United Bancorporation go up and down completely randomly.

Pair Corralation between Oconee Financial and United Bancorporation

Given the investment horizon of 90 days Oconee Financial is expected to generate 7.48 times less return on investment than United Bancorporation. But when comparing it to its historical volatility, Oconee Financial is 4.73 times less risky than United Bancorporation. It trades about 0.11 of its potential returns per unit of risk. United Bancorporation of is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5,050  in United Bancorporation of on September 13, 2024 and sell it today you would earn a total of  700.00  from holding United Bancorporation of or generate 13.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Oconee Financial  vs.  United Bancorp. of

Oconee Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oconee Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Oconee Financial is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

United Bancorporation

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Bancorporation of are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, United Bancorporation sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oconee Financial and United Bancorporation

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

The idea behind Oconee Financial and United Bancorporation of 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 Stocks Directory module to find actively traded stocks across global markets.