Correlation Between Oconee Federal and Chemung Financial

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

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

Diversification Opportunities for Oconee Federal and Chemung Financial

-0.55

Correlation Coefficient

Oconee Federal  Chemung Financial

Excellent diversification

The 3 months correlation between Oconee and Chemung is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Oconee Federal Financial and Chemung Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemung Financial Corp and Oconee Federal 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 Oconee Federal Financial are associated (or correlated) with Chemung Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemung Financial Corp has no effect on the direction of Oconee Federal i.e., Oconee Federal and Chemung Financial go up and down completely randomly.

Pair Corralation between Oconee Federal and Chemung Financial

Given the investment horizon of 90 days Oconee Federal Financial is expected to under-perform the Chemung Financial. In addition to that, Oconee Federal is 1.84 times more volatile than Chemung Financial Corp. It trades about -0.08 of its total potential returns per unit of risk. Chemung Financial Corp is currently generating about 0.03 per unit of volatility. If you would invest  4,507  in Chemung Financial Corp on August 16, 2024 and sell it today you would earn a total of  672.00  from holding Chemung Financial Corp or generate 14.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	33.33%
Values	Daily Returns

Oconee Federal Financial  vs.  Chemung Financial Corp

Oconee Federal Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Chemung Financial Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chemung Financial Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady primary indicators, Chemung Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oconee Federal and Chemung Financial

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

The idea behind Oconee Federal Financial and Chemung 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .