Correlation Between Able View and Reservoir Media

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

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

Diversification Opportunities for Able View and Reservoir Media

-0.53

Correlation Coefficient

Able View  Reservoir Media

Excellent diversification

The 3 months correlation between Able and Reservoir is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Able View Global and Reservoir Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reservoir Media and Able View 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 Able View Global are associated (or correlated) with Reservoir Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reservoir Media has no effect on the direction of Able View i.e., Able View and Reservoir Media go up and down completely randomly.

Pair Corralation between Able View and Reservoir Media

Assuming the 90 days horizon Able View Global is expected to generate 16.65 times more return on investment than Reservoir Media. However, Able View is 16.65 times more volatile than Reservoir Media. It trades about 0.15 of its potential returns per unit of risk. Reservoir Media is currently generating about 0.02 per unit of risk. If you would invest  3.00  in Able View Global on October 11, 2024 and sell it today you would lose (1.00) from holding Able View Global or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	39.8%
Values	Daily Returns

Able View Global  vs.  Reservoir Media

Able View Global

Risk-Adjusted Performance

6 of 100

Good

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

Reservoir Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reservoir Media has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Reservoir Media is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Able View and Reservoir Media

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

The idea behind Able View Global and Reservoir Media 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 Commodity Directory module to find actively traded commodities issued by global exchanges.