Correlation Between ACNB and Home Bancorp

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

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

Diversification Opportunities for ACNB and Home Bancorp

0.9

Correlation Coefficient

ACNB  Home Bancorp

Almost no diversification

The 3 months correlation between ACNB and Home is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding ACNB Corp. and Home Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Bancorp and ACNB 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 ACNB Corporation are associated (or correlated) with Home Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Bancorp has no effect on the direction of ACNB i.e., ACNB and Home Bancorp go up and down completely randomly.

Pair Corralation between ACNB and Home Bancorp

Given the investment horizon of 90 days ACNB Corporation is expected to under-perform the Home Bancorp. In addition to that, ACNB is 1.41 times more volatile than Home Bancorp. It trades about -0.13 of its total potential returns per unit of risk. Home Bancorp is currently generating about -0.1 per unit of volatility. If you would invest  3,683  in Home Bancorp on February 1, 2024 and sell it today you would lose (183.00) from holding Home Bancorp or give up 4.97% of portfolio value over 90 days.

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

ACNB Corp.  vs.  Home Bancorp

ACNB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ACNB Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Home Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with ACNB and Home Bancorp

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

The idea behind ACNB Corporation and Home Bancorp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.