Correlation Between Cheer Holding and Reservoir Media

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

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

Diversification Opportunities for Cheer Holding and Reservoir Media

-0.48

Correlation Coefficient

Cheer Holding  Reservoir Media

Very good diversification

The 3 months correlation between Cheer and Reservoir is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Cheer Holding and Reservoir Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reservoir Media and Cheer Holding 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 Cheer Holding 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 Cheer Holding i.e., Cheer Holding and Reservoir Media go up and down completely randomly.

Pair Corralation between Cheer Holding and Reservoir Media

Considering the 90-day investment horizon Cheer Holding is expected to generate 2.63 times less return on investment than Reservoir Media. In addition to that, Cheer Holding is 1.28 times more volatile than Reservoir Media. It trades about 0.03 of its total potential returns per unit of risk. Reservoir Media is currently generating about 0.12 per unit of volatility. If you would invest  736.00  in Reservoir Media on October 3, 2024 and sell it today you would earn a total of  168.00  from holding Reservoir Media or generate 22.83% return on investment over 90 days.

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

Cheer Holding  vs.  Reservoir Media

Cheer Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cheer Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Reservoir Media

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Reservoir Media are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Reservoir Media reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cheer Holding and Reservoir Media

The main advantage of trading using opposite Cheer Holding and Reservoir Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheer Holding 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 Cheer Holding 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.