Correlation Between Affinity Bancshares and TC Bancshares

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

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

Diversification Opportunities for Affinity Bancshares and TC Bancshares

-0.4

Correlation Coefficient

Affinity Bancshares  TC Bancshares

Very good diversification

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

Pair Corralation between Affinity Bancshares and TC Bancshares

Given the investment horizon of 90 days Affinity Bancshares is expected to generate 1.22 times more return on investment than TC Bancshares. However, Affinity Bancshares is 1.22 times more volatile than TC Bancshares. It trades about 0.05 of its potential returns per unit of risk. TC Bancshares is currently generating about -0.01 per unit of risk. If you would invest  1,414  in Affinity Bancshares on September 18, 2024 and sell it today you would earn a total of  748.00  from holding Affinity Bancshares or generate 52.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	81.91%
Values	Daily Returns

Affinity Bancshares  vs.  TC Bancshares

Affinity Bancshares

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Affinity Bancshares are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Affinity Bancshares is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

TC Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Affinity Bancshares and TC Bancshares

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

The idea behind Affinity Bancshares and TC Bancshares 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 CEOs Directory module to screen CEOs from public companies around the world.