Correlation Between Townsquare Media and Glory Star

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

By analyzing existing cross correlation between Townsquare Media and Glory Star New, you can compare the effects of market volatilities on Townsquare Media and Glory Star 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 Townsquare Media with a short position of Glory Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Townsquare Media and Glory Star.

Diversification Opportunities for Townsquare Media and Glory Star

-0.59

Correlation Coefficient

Townsquare Media  Glory Star

Excellent diversification

The 3 months correlation between Townsquare and Glory is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and Glory Star New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glory Star New and Townsquare Media 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 Townsquare Media are associated (or correlated) with Glory Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glory Star New has no effect on the direction of Townsquare Media i.e., Townsquare Media and Glory Star go up and down completely randomly.

Pair Corralation between Townsquare Media and Glory Star

Considering the 90-day investment horizon Townsquare Media is expected to under-perform the Glory Star. But the stock apears to be less risky and, when comparing its historical volatility, Townsquare Media is 4.66 times less risky than Glory Star. The stock trades about -0.22 of its potential returns per unit of risk. The Glory Star New is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  0.49  in Glory Star New on February 28, 2024 and sell it today you would lose (0.03) from holding Glory Star New or give up 6.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	71.43%
Values	Daily Returns

Townsquare Media  vs.  Glory Star New

Townsquare Media

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Townsquare Media are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Townsquare Media may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Glory Star New

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Glory Star New are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Glory Star showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Townsquare Media and Glory Star

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

The idea behind Townsquare Media and Glory Star New 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.