Correlation Between SAG Holdings and Academy Sports

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

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

Diversification Opportunities for SAG Holdings and Academy Sports

-0.05

Correlation Coefficient

SAG Holdings  Academy Sports

Good diversification

The 3 months correlation between SAG and Academy is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding SAG Holdings Limited and Academy Sports Outdoors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Academy Sports Outdoors and SAG Holdings 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 SAG Holdings Limited are associated (or correlated) with Academy Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Academy Sports Outdoors has no effect on the direction of SAG Holdings i.e., SAG Holdings and Academy Sports go up and down completely randomly.

Pair Corralation between SAG Holdings and Academy Sports

Considering the 90-day investment horizon SAG Holdings Limited is expected to under-perform the Academy Sports. In addition to that, SAG Holdings is 2.83 times more volatile than Academy Sports Outdoors. It trades about -0.2 of its total potential returns per unit of risk. Academy Sports Outdoors is currently generating about 0.02 per unit of volatility. If you would invest  5,340  in Academy Sports Outdoors on October 11, 2024 and sell it today you would earn a total of  546.00  from holding Academy Sports Outdoors or generate 10.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	10.89%
Values	Daily Returns

SAG Holdings Limited  vs.  Academy Sports Outdoors

SAG Holdings Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Academy Sports Outdoors

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Academy Sports Outdoors are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Academy Sports may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SAG Holdings and Academy Sports

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

The idea behind SAG Holdings Limited and Academy Sports Outdoors 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.