Correlation Between CCSB Financial and Nmb Financial

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

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

Diversification Opportunities for CCSB Financial and Nmb Financial

0.17

Correlation Coefficient

CCSB Financial  Nmb Financial

Average diversification

The 3 months correlation between CCSB and Nmb is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding CCSB Financial Corp and Nmb Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nmb Financial Corp and CCSB 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 CCSB Financial Corp are associated (or correlated) with Nmb Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nmb Financial Corp has no effect on the direction of CCSB Financial i.e., CCSB Financial and Nmb Financial go up and down completely randomly.

Pair Corralation between CCSB Financial and Nmb Financial

Given the investment horizon of 90 days CCSB Financial Corp is expected to generate 10.95 times more return on investment than Nmb Financial. However, CCSB Financial is 10.95 times more volatile than Nmb Financial Corp. It trades about 0.06 of its potential returns per unit of risk. Nmb Financial Corp is currently generating about -0.08 per unit of risk. If you would invest  1,155  in CCSB Financial Corp on February 4, 2024 and sell it today you would earn a total of  20.00  from holding CCSB Financial Corp or generate 1.73% return on investment over 90 days.

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

CCSB Financial Corp  vs.  Nmb Financial Corp

CCSB Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nmb Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nmb Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Nmb Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CCSB Financial and Nmb Financial

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

The idea behind CCSB Financial Corp and Nmb 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.