Correlation Between CSL and Sports Entertainment
Can any of the company-specific risk be diversified away by investing in both CSL and Sports Entertainment 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 CSL and Sports Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSL and Sports Entertainment Group, you can compare the effects of market volatilities on CSL and Sports Entertainment 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 CSL with a short position of Sports Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and Sports Entertainment.
Diversification Opportunities for CSL and Sports Entertainment
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CSL and Sports is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CSL and Sports Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sports Entertainment and CSL 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 CSL are associated (or correlated) with Sports Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sports Entertainment has no effect on the direction of CSL i.e., CSL and Sports Entertainment go up and down completely randomly.
Pair Corralation between CSL and Sports Entertainment
Assuming the 90 days trading horizon CSL is expected to generate 0.21 times more return on investment than Sports Entertainment. However, CSL is 4.7 times less risky than Sports Entertainment. It trades about -0.06 of its potential returns per unit of risk. Sports Entertainment Group is currently generating about -0.05 per unit of risk. If you would invest 28,518 in CSL on September 29, 2024 and sell it today you would lose (283.00) from holding CSL or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSL vs. Sports Entertainment Group
Performance |
| Timeline |
| CSL |
| Sports Entertainment |
CSL and Sports Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSL and Sports Entertainment
The main advantage of trading using opposite CSL and Sports Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL position performs unexpectedly, Sports Entertainment 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 Sports Entertainment will offset losses from the drop in Sports Entertainment's long position.The idea behind CSL and Sports Entertainment 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.| Sports Entertainment vs. Aurelia Metals | Sports Entertainment vs. DY6 Metals | Sports Entertainment vs. Hotel Property Investments | Sports Entertainment vs. ACDC Metals |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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