Correlation Between City Sports and TISCO Financial

Can any of the company-specific risk be diversified away by investing in both City Sports and TISCO Financial 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 TISCO Financial 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 TISCO Financial Group, you can compare the effects of market volatilities on City Sports and TISCO Financial 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 TISCO Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Sports and TISCO Financial.

Diversification Opportunities for City Sports and TISCO Financial

0.4

Correlation Coefficient

City Sports  TISCO Financial

Very weak diversification

The 3 months correlation between City and TISCO is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding City Sports and and TISCO Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TISCO Financial Group 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 TISCO Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TISCO Financial Group has no effect on the direction of City Sports i.e., City Sports and TISCO Financial go up and down completely randomly.

Pair Corralation between City Sports and TISCO Financial

Assuming the 90 days trading horizon City Sports and is expected to generate 1.44 times more return on investment than TISCO Financial. However, City Sports is 1.44 times more volatile than TISCO Financial Group. It trades about 0.59 of its potential returns per unit of risk. TISCO Financial Group is currently generating about 0.04 per unit of risk. If you would invest  8,100  in City Sports and on September 5, 2024 and sell it today you would earn a total of  450.00  from holding City Sports and or generate 5.56% return on investment over 90 days.

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

City Sports and  vs.  TISCO Financial Group

City Sports

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in City Sports and are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, City Sports disclosed solid returns over the last few months and may actually be approaching a breakup point.

TISCO Financial Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TISCO Financial Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, TISCO Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with City Sports and TISCO Financial

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

The idea behind City Sports and and TISCO Financial Group 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.