Correlation Between City Sports and RS Public

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

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

Diversification Opportunities for City Sports and RS Public

0.17

Correlation Coefficient

City Sports  RS Public

Average diversification

The 3 months correlation between City and RS Public is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding City Sports and and RS Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RS Public and City Sports 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 City Sports and are associated (or correlated) with RS Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RS Public has no effect on the direction of City Sports i.e., City Sports and RS Public go up and down completely randomly.

Pair Corralation between City Sports and RS Public

Assuming the 90 days trading horizon City Sports and is expected to generate 0.1 times more return on investment than RS Public. However, City Sports and is 10.02 times less risky than RS Public. It trades about -0.06 of its potential returns per unit of risk. RS Public is currently generating about -0.33 per unit of risk. If you would invest  8,900  in City Sports and on December 21, 2024 and sell it today you would lose (300.00) from holding City Sports and or give up 3.37% of portfolio value over 90 days.

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

City Sports and  vs.  RS Public

City Sports

Risk-Adjusted Performance

Very Weak

Over the last 90 days City Sports and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, City Sports is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

RS Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days RS Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with City Sports and RS Public

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

The idea behind City Sports and and RS Public 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.