Correlation Between TSOGO SUN and Costco Wholesale

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

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

Diversification Opportunities for TSOGO SUN and Costco Wholesale

0.19

Correlation Coefficient

TSOGO SUN  Costco Wholesale

Average diversification

The 3 months correlation between TSOGO and Costco is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding TSOGO SUN GAMING and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale and TSOGO SUN 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 TSOGO SUN GAMING are associated (or correlated) with Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale has no effect on the direction of TSOGO SUN i.e., TSOGO SUN and Costco Wholesale go up and down completely randomly.

Pair Corralation between TSOGO SUN and Costco Wholesale

Assuming the 90 days horizon TSOGO SUN GAMING is expected to generate 1.18 times more return on investment than Costco Wholesale. However, TSOGO SUN is 1.18 times more volatile than Costco Wholesale. It trades about -0.17 of its potential returns per unit of risk. Costco Wholesale is currently generating about -0.27 per unit of risk. If you would invest  45.00  in TSOGO SUN GAMING on December 28, 2024 and sell it today you would lose (5.00) from holding TSOGO SUN GAMING or give up 11.11% of portfolio value over 90 days.

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

TSOGO SUN GAMING  vs.  Costco Wholesale

TSOGO SUN GAMING

Risk-Adjusted Performance

Very Weak

Over the last 90 days TSOGO SUN GAMING has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Costco Wholesale

Risk-Adjusted Performance

Very Weak

Over the last 90 days Costco Wholesale has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Costco Wholesale is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TSOGO SUN and Costco Wholesale

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

The idea behind TSOGO SUN GAMING and Costco Wholesale 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.