Correlation Between One Step and Sportsquest

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

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

Diversification Opportunities for One Step and Sportsquest

0.22

Correlation Coefficient

One Step  Sportsquest

Modest diversification

The 3 months correlation between One and Sportsquest is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding One Step Vending and Sportsquest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportsquest and One Step 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 One Step Vending are associated (or correlated) with Sportsquest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportsquest has no effect on the direction of One Step i.e., One Step and Sportsquest go up and down completely randomly.

Pair Corralation between One Step and Sportsquest

Given the investment horizon of 90 days One Step is expected to generate 1.38 times less return on investment than Sportsquest. But when comparing it to its historical volatility, One Step Vending is 2.08 times less risky than Sportsquest. It trades about 0.16 of its potential returns per unit of risk. Sportsquest is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Sportsquest on December 26, 2024 and sell it today you would lose (0.01) from holding Sportsquest or give up 50.0% of portfolio value over 90 days.

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

One Step Vending  vs.  Sportsquest

One Step Vending

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in One Step Vending are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, One Step disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sportsquest

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sportsquest are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Sportsquest unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with One Step and Sportsquest

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

The idea behind One Step Vending and Sportsquest 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 Commodity Directory module to find actively traded commodities issued by global exchanges.