Correlation Between PSB Holdings and First Community
Can any of the company-specific risk be diversified away by investing in both PSB Holdings and First Community 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 PSB Holdings and First Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PSB Holdings and First Community, you can compare the effects of market volatilities on PSB Holdings and First Community 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 PSB Holdings with a short position of First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of PSB Holdings and First Community.
Diversification Opportunities for PSB Holdings and First Community
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PSB and First is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding PSB Holdings and First Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community and PSB Holdings 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 PSB Holdings are associated (or correlated) with First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community has no effect on the direction of PSB Holdings i.e., PSB Holdings and First Community go up and down completely randomly.
Pair Corralation between PSB Holdings and First Community
Given the investment horizon of 90 days PSB Holdings is expected to generate 1.08 times more return on investment than First Community. However, PSB Holdings is 1.08 times more volatile than First Community. It trades about 0.21 of its potential returns per unit of risk. First Community is currently generating about 0.01 per unit of risk. If you would invest 2,018 in PSB Holdings on August 25, 2024 and sell it today you would earn a total of 772.00 from holding PSB Holdings or generate 38.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PSB Holdings vs. First Community
Performance |
| Timeline |
| PSB Holdings |
| First Community |
PSB Holdings and First Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PSB Holdings and First Community
The main advantage of trading using opposite PSB Holdings and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PSB Holdings position performs unexpectedly, First Community 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 First Community will offset losses from the drop in First Community's long position.| PSB Holdings vs. Eagle Financial Services | PSB Holdings vs. National Capital Bank | PSB Holdings vs. Community Heritage Financial | PSB Holdings vs. Citizens Financial Corp |
| First Community vs. Standard Bank Group | First Community vs. PSB Holdings | First Community vs. United Overseas Bank | First Community vs. Turkiye Garanti Bankasi |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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