Correlation Between Affinity Bancshares and Old Point

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

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

Diversification Opportunities for Affinity Bancshares and Old Point

0.0

Correlation Coefficient

Affinity Bancshares  Old Point

Pay attention - limited upside

The 3 months correlation between Affinity and Old is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Affinity Bancshares and Old Point Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Point Financial 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 Old Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Point Financial has no effect on the direction of Affinity Bancshares i.e., Affinity Bancshares and Old Point go up and down completely randomly.

Pair Corralation between Affinity Bancshares and Old Point

Given the investment horizon of 90 days Affinity Bancshares is expected to generate 11.89 times less return on investment than Old Point. But when comparing it to its historical volatility, Affinity Bancshares is 2.59 times less risky than Old Point. It trades about 0.04 of its potential returns per unit of risk. Old Point Financial is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,867  in Old Point Financial on September 3, 2024 and sell it today you would earn a total of  385.00  from holding Old Point Financial or generate 20.62% return on investment over 90 days.

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

Affinity Bancshares  vs.  Old Point Financial

Affinity Bancshares

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Affinity Bancshares are ranked lower than 3 (%) 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.

Old Point Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Old Point Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Old Point reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Affinity Bancshares and Old Point

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

The idea behind Affinity Bancshares and Old Point Financial 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.