Correlation Between Community Heritage and PSB Holdings

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

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

Diversification Opportunities for Community Heritage and PSB Holdings

-0.57

Correlation Coefficient

Community Heritage  PSB Holdings

Excellent diversification

The 3 months correlation between Community and PSB is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Community Heritage Financial and PSB Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSB Holdings and Community Heritage 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 Community Heritage Financial are associated (or correlated) with PSB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSB Holdings has no effect on the direction of Community Heritage i.e., Community Heritage and PSB Holdings go up and down completely randomly.

Pair Corralation between Community Heritage and PSB Holdings

Given the investment horizon of 90 days Community Heritage Financial is expected to generate 0.86 times more return on investment than PSB Holdings. However, Community Heritage Financial is 1.16 times less risky than PSB Holdings. It trades about 0.18 of its potential returns per unit of risk. PSB Holdings is currently generating about -0.03 per unit of risk. If you would invest  2,432  in Community Heritage Financial on April 29, 2025 and sell it today you would earn a total of  268.00  from holding Community Heritage Financial or generate 11.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Community Heritage Financial  vs.  PSB Holdings

Community Heritage

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Community Heritage Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical indicators, Community Heritage may actually be approaching a critical reversion point that can send shares even higher in August 2025.

PSB Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days PSB Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, PSB Holdings is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Community Heritage and PSB Holdings

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

The idea behind Community Heritage Financial and PSB Holdings 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 Transaction History module to view history of all your transactions and understand their impact on performance.