Correlation Between LINKBANCORP and Colony Bankcorp

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

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

Diversification Opportunities for LINKBANCORP and Colony Bankcorp

0.91

Correlation Coefficient

LINKBANCORP  Colony Bankcorp

Almost no diversification

The 3 months correlation between LINKBANCORP and Colony is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding LINKBANCORP and Colony Bankcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colony Bankcorp and LINKBANCORP 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 LINKBANCORP are associated (or correlated) with Colony Bankcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colony Bankcorp has no effect on the direction of LINKBANCORP i.e., LINKBANCORP and Colony Bankcorp go up and down completely randomly.

Pair Corralation between LINKBANCORP and Colony Bankcorp

Given the investment horizon of 90 days LINKBANCORP is expected to generate 1.31 times more return on investment than Colony Bankcorp. However, LINKBANCORP is 1.31 times more volatile than Colony Bankcorp. It trades about 0.0 of its potential returns per unit of risk. Colony Bankcorp is currently generating about -0.03 per unit of risk. If you would invest  703.00  in LINKBANCORP on February 3, 2025 and sell it today you would lose (17.00) from holding LINKBANCORP or give up 2.42% of portfolio value over 90 days.

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

LINKBANCORP  vs.  Colony Bankcorp

LINKBANCORP

Risk-Adjusted Performance

Very Weak

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

Colony Bankcorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Colony Bankcorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Colony Bankcorp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with LINKBANCORP and Colony Bankcorp

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

The idea behind LINKBANCORP and Colony Bankcorp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.