Correlation Between Stellar and Affinity Bancshares

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

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

Diversification Opportunities for Stellar and Affinity Bancshares

-0.59

Correlation Coefficient

Stellar  Affinity Bancshares

Excellent diversification

The 3 months correlation between Stellar and Affinity is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Affinity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity Bancshares and Stellar 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 Stellar 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 Stellar i.e., Stellar and Affinity Bancshares go up and down completely randomly.

Pair Corralation between Stellar and Affinity Bancshares

Assuming the 90 days trading horizon Stellar is expected to under-perform the Affinity Bancshares. In addition to that, Stellar is 3.9 times more volatile than Affinity Bancshares. It trades about -0.07 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  1,718  in Affinity Bancshares on January 26, 2025 and sell it today you would earn a total of  146.00  from holding Affinity Bancshares or generate 8.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Stellar  vs.  Affinity Bancshares

Stellar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stellar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's primary indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for Stellar shareholders.

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 Stellar and Affinity Bancshares

The main advantage of trading using opposite Stellar and Affinity Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar 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 Stellar 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.