Correlation Between Top Frontier and Security Bank

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

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

Diversification Opportunities for Top Frontier and Security Bank

0.32

Correlation Coefficient

Top Frontier  Security Bank

Weak diversification

The 3 months correlation between Top and Security is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Top Frontier Investment 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 Top Frontier 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 Top Frontier Investment 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 Top Frontier i.e., Top Frontier and Security Bank go up and down completely randomly.

Pair Corralation between Top Frontier and Security Bank

Assuming the 90 days trading horizon Top Frontier is expected to generate 9.85 times less return on investment than Security Bank. In addition to that, Top Frontier is 1.51 times more volatile than Security Bank Corp. It trades about 0.01 of its total potential returns per unit of risk. Security Bank Corp is currently generating about 0.09 per unit of volatility. If you would invest  7,595  in Security Bank Corp on September 17, 2024 and sell it today you would earn a total of  1,095  from holding Security Bank Corp or generate 14.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

Top Frontier Investment  vs.  Security Bank Corp

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.

Security Bank Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Security Bank Corp are ranked lower than 7 (%) 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.

Pair Trading with Top Frontier and Security Bank

The main advantage of trading using opposite Top Frontier and Security Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Frontier 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 Top Frontier Investment 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.