Correlation Between Security Bank and Top Frontier

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

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

Diversification Opportunities for Security Bank and Top Frontier

-0.38

Correlation Coefficient

Security Bank  Top Frontier

Very good diversification

The 3 months correlation between Security and Top is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Security Bank Corp and Top Frontier Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Frontier Investment and Security Bank 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 Security Bank Corp are associated (or correlated) with Top Frontier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Frontier Investment has no effect on the direction of Security Bank i.e., Security Bank and Top Frontier go up and down completely randomly.

Pair Corralation between Security Bank and Top Frontier

Assuming the 90 days trading horizon Security Bank Corp is expected to under-perform the Top Frontier. But the stock apears to be less risky and, when comparing its historical volatility, Security Bank Corp is 1.69 times less risky than Top Frontier. The stock trades about -0.06 of its potential returns per unit of risk. The Top Frontier Investment is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  6,500  in Top Frontier Investment on September 4, 2024 and sell it today you would lose (290.00) from holding Top Frontier Investment or give up 4.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Security Bank Corp  vs.  Top Frontier Investment

Security Bank Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Security Bank Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Security Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Top Frontier Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Top Frontier Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Top Frontier is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Security Bank and Top Frontier

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

The idea behind Security Bank Corp and Top Frontier Investment 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.