Correlation Between HV Bancorp and LINKBANCORP

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

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

Diversification Opportunities for HV Bancorp and LINKBANCORP

0.05

Correlation Coefficient

HV Bancorp  LINKBANCORP

Significant diversification

The 3 months correlation between HVBC and LINKBANCORP is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding HV Bancorp and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP and HV 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 HV Bancorp are associated (or correlated) with LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of HV Bancorp i.e., HV Bancorp and LINKBANCORP go up and down completely randomly.

Pair Corralation between HV Bancorp and LINKBANCORP

Given the investment horizon of 90 days HV Bancorp is expected to generate 0.97 times more return on investment than LINKBANCORP. However, HV Bancorp is 1.03 times less risky than LINKBANCORP. It trades about 0.08 of its potential returns per unit of risk. LINKBANCORP is currently generating about -0.02 per unit of risk. If you would invest  2,100  in HV Bancorp on February 13, 2024 and sell it today you would earn a total of  1,360  from holding HV Bancorp or generate 64.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	54.34%
Values	Daily Returns

HV Bancorp  vs.  LINKBANCORP

HV Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HV Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, HV Bancorp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

LINKBANCORP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LINKBANCORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, LINKBANCORP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HV Bancorp and LINKBANCORP

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

The idea behind HV Bancorp and LINKBANCORP 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..