Correlation Between Castle Peak and City Sports

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

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

Diversification Opportunities for Castle Peak and City Sports

-0.19

Correlation Coefficient

Castle Peak  City Sports

Good diversification

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

Pair Corralation between Castle Peak and City Sports

Assuming the 90 days trading horizon Castle Peak Holdings is expected to generate 1.11 times more return on investment than City Sports. However, Castle Peak is 1.11 times more volatile than City Sports and. It trades about 0.02 of its potential returns per unit of risk. City Sports and is currently generating about -0.09 per unit of risk. If you would invest  725.00  in Castle Peak Holdings on April 24, 2025 and sell it today you would earn a total of  10.00  from holding Castle Peak Holdings or generate 1.38% return on investment over 90 days.

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

Castle Peak Holdings  vs.  City Sports and

Castle Peak Holdings

Risk-Adjusted Performance

Weak

Over the last 90 days Castle Peak Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Castle Peak is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

City Sports

Risk-Adjusted Performance

Very Weak

Over the last 90 days City Sports and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Castle Peak and City Sports

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

The idea behind Castle Peak Holdings and City Sports and 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.