Correlation Between Concrete Pumping and Independent Bank

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

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

Diversification Opportunities for Concrete Pumping and Independent Bank

0.23

Correlation Coefficient

Concrete Pumping  Independent Bank

Modest diversification

The 3 months correlation between Concrete and Independent is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Concrete Pumping Holdings and Independent Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independent Bank and Concrete Pumping 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 Concrete Pumping Holdings are associated (or correlated) with Independent Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independent Bank has no effect on the direction of Concrete Pumping i.e., Concrete Pumping and Independent Bank go up and down completely randomly.

Pair Corralation between Concrete Pumping and Independent Bank

Given the investment horizon of 90 days Concrete Pumping Holdings is expected to generate 1.02 times more return on investment than Independent Bank. However, Concrete Pumping is 1.02 times more volatile than Independent Bank. It trades about 0.02 of its potential returns per unit of risk. Independent Bank is currently generating about -0.03 per unit of risk. If you would invest  606.00  in Concrete Pumping Holdings on January 25, 2024 and sell it today you would earn a total of  51.00  from holding Concrete Pumping Holdings or generate 8.42% return on investment over 90 days.

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

Concrete Pumping Holdings  vs.  Independent Bank

Concrete Pumping Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concrete Pumping Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Independent Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Independent Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Concrete Pumping and Independent Bank

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

The idea behind Concrete Pumping Holdings and Independent Bank 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.