Correlation Between LINKBANCORP and Affinity Bancshares

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

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

Diversification Opportunities for LINKBANCORP and Affinity Bancshares

-0.1

Correlation Coefficient

LINKBANCORP  Affinity Bancshares

Good diversification

The 3 months correlation between LINKBANCORP and Affinity is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding LINKBANCORP and Affinity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity Bancshares and LINKBANCORP 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 LINKBANCORP are associated (or correlated) with Affinity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity Bancshares has no effect on the direction of LINKBANCORP i.e., LINKBANCORP and Affinity Bancshares go up and down completely randomly.

Pair Corralation between LINKBANCORP and Affinity Bancshares

Given the investment horizon of 90 days LINKBANCORP is expected to under-perform the Affinity Bancshares. In addition to that, LINKBANCORP is 1.76 times more volatile than Affinity Bancshares. It trades about -0.06 of its total potential returns per unit of risk. Affinity Bancshares is currently generating about 0.11 per unit of volatility. If you would invest  1,619  in Affinity Bancshares on January 4, 2025 and sell it today you would earn a total of  137.00  from holding Affinity Bancshares or generate 8.46% return on investment over 90 days.

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

LINKBANCORP  vs.  Affinity Bancshares

LINKBANCORP

Risk-Adjusted Performance

Very Weak

Over the last 90 days LINKBANCORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Affinity Bancshares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Affinity Bancshares are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental drivers, Affinity Bancshares may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with LINKBANCORP and Affinity Bancshares

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

The idea behind LINKBANCORP and Affinity 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.