Correlation Between First Keystone and Cincinnati Bancorp

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

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

Diversification Opportunities for First Keystone and Cincinnati Bancorp

-0.12

Correlation Coefficient

First Keystone  Cincinnati Bancorp

Good diversification

The 3 months correlation between First and Cincinnati is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding First Keystone Corp and Cincinnati Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Bancorp and First Keystone 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 First Keystone Corp are associated (or correlated) with Cincinnati Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cincinnati Bancorp has no effect on the direction of First Keystone i.e., First Keystone and Cincinnati Bancorp go up and down completely randomly.

Pair Corralation between First Keystone and Cincinnati Bancorp

Given the investment horizon of 90 days First Keystone is expected to generate 3.73 times less return on investment than Cincinnati Bancorp. In addition to that, First Keystone is 2.45 times more volatile than Cincinnati Bancorp. It trades about 0.02 of its total potential returns per unit of risk. Cincinnati Bancorp is currently generating about 0.16 per unit of volatility. If you would invest  1,480  in Cincinnati Bancorp on September 3, 2024 and sell it today you would earn a total of  181.00  from holding Cincinnati Bancorp or generate 12.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	8.63%
Values	Daily Returns

First Keystone Corp  vs.  Cincinnati Bancorp

First Keystone Corp

Risk-Adjusted Performance

14 of 100

Good

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

Cincinnati Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cincinnati Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cincinnati Bancorp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Keystone and Cincinnati Bancorp

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

The idea behind First Keystone Corp and Cincinnati Bancorp 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.