Correlation Between Provident Bancorp and Achieve Life

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

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

Diversification Opportunities for Provident Bancorp and Achieve Life

0.07

Correlation Coefficient

Provident Bancorp  Achieve Life

Significant diversification

The 3 months correlation between Provident and Achieve is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Provident Bancorp and Achieve Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Achieve Life Sciences and Provident Bancorp 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 Provident Bancorp are associated (or correlated) with Achieve Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Achieve Life Sciences has no effect on the direction of Provident Bancorp i.e., Provident Bancorp and Achieve Life go up and down completely randomly.

Pair Corralation between Provident Bancorp and Achieve Life

Given the investment horizon of 90 days Provident Bancorp is expected to under-perform the Achieve Life. In addition to that, Provident Bancorp is 1.6 times more volatile than Achieve Life Sciences. It trades about -0.03 of its total potential returns per unit of risk. Achieve Life Sciences is currently generating about 0.03 per unit of volatility. If you would invest  448.00  in Achieve Life Sciences on February 2, 2024 and sell it today you would earn a total of  4.00  from holding Achieve Life Sciences or generate 0.89% return on investment over 90 days.

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

Provident Bancorp  vs.  Achieve Life Sciences

Provident Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Provident Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Achieve Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Achieve Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical indicators, Achieve Life is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Provident Bancorp and Achieve Life

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

The idea behind Provident Bancorp and Achieve Life Sciences 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.