Correlation Between Oconee Federal and Citizens Holding

Can any of the company-specific risk be diversified away by investing in both Oconee Federal and Citizens Holding 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 Citizens Holding 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 Citizens Holding, you can compare the effects of market volatilities on Oconee Federal and Citizens Holding 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 Citizens Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oconee Federal and Citizens Holding.

Diversification Opportunities for Oconee Federal and Citizens Holding

0.72

Correlation Coefficient

Oconee Federal  Citizens Holding

Poor diversification

The 3 months correlation between Oconee and Citizens is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Oconee Federal Financial and Citizens Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Holding 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 Citizens Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Holding has no effect on the direction of Oconee Federal i.e., Oconee Federal and Citizens Holding go up and down completely randomly.

Pair Corralation between Oconee Federal and Citizens Holding

Given the investment horizon of 90 days Oconee Federal Financial is expected to under-perform the Citizens Holding. In addition to that, Oconee Federal is 1.32 times more volatile than Citizens Holding. It trades about -0.12 of its total potential returns per unit of risk. Citizens Holding is currently generating about -0.01 per unit of volatility. If you would invest  1,271  in Citizens Holding on September 29, 2024 and sell it today you would lose (76.00) from holding Citizens Holding or give up 5.98% of portfolio value over 90 days.

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

Oconee Federal Financial  vs.  Citizens Holding

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.

Citizens Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Oconee Federal and Citizens Holding

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

The idea behind Oconee Federal Financial and Citizens Holding 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.