Correlation Between Security Bank and Crown Asia

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

By analyzing existing cross correlation between Security Bank Corp and Crown Asia Chemicals, you can compare the effects of market volatilities on Security Bank and Crown Asia 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 Security Bank with a short position of Crown Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Security Bank and Crown Asia.

Diversification Opportunities for Security Bank and Crown Asia

0.4

Correlation Coefficient

Security Bank  Crown Asia

Very weak diversification

The 3 months correlation between Security and Crown is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Security Bank Corp and Crown Asia Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Asia Chemicals and Security Bank 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 Security Bank Corp are associated (or correlated) with Crown Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Asia Chemicals has no effect on the direction of Security Bank i.e., Security Bank and Crown Asia go up and down completely randomly.

Pair Corralation between Security Bank and Crown Asia

Assuming the 90 days trading horizon Security Bank Corp is expected to generate 1.3 times more return on investment than Crown Asia. However, Security Bank is 1.3 times more volatile than Crown Asia Chemicals. It trades about 0.15 of its potential returns per unit of risk. Crown Asia Chemicals is currently generating about 0.03 per unit of risk. If you would invest  6,200  in Security Bank Corp on April 24, 2025 and sell it today you would earn a total of  1,340  from holding Security Bank Corp or generate 21.61% return on investment over 90 days.

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

Security Bank Corp  vs.  Crown Asia Chemicals

Security Bank Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Security Bank Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Security Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Crown Asia Chemicals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crown Asia Chemicals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Crown Asia is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Security Bank and Crown Asia

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

The idea behind Security Bank Corp and Crown Asia Chemicals 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.