Correlation Between Affinity Bancshares and Grupo Supervielle

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

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

Diversification Opportunities for Affinity Bancshares and Grupo Supervielle

0.45

Correlation Coefficient

Affinity Bancshares  Grupo Supervielle

Very weak diversification

The 3 months correlation between Affinity and Grupo is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Affinity Bancshares and Grupo Supervielle SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Supervielle 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 Grupo Supervielle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Supervielle has no effect on the direction of Affinity Bancshares i.e., Affinity Bancshares and Grupo Supervielle go up and down completely randomly.

Pair Corralation between Affinity Bancshares and Grupo Supervielle

Given the investment horizon of 90 days Affinity Bancshares is expected to generate 65.22 times less return on investment than Grupo Supervielle. But when comparing it to its historical volatility, Affinity Bancshares is 5.15 times less risky than Grupo Supervielle. It trades about 0.02 of its potential returns per unit of risk. Grupo Supervielle SA is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  828.00  in Grupo Supervielle SA on September 14, 2024 and sell it today you would earn a total of  490.00  from holding Grupo Supervielle SA or generate 59.18% return on investment over 90 days.

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

Affinity Bancshares  vs.  Grupo Supervielle SA

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 current stock price confusion, may contribute to short-horizon losses for the traders.

Grupo Supervielle

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Supervielle SA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Grupo Supervielle showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Affinity Bancshares and Grupo Supervielle

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

The idea behind Affinity Bancshares and Grupo Supervielle SA 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.