Correlation Between Daiwa Securities and Reservoir Media

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

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

Diversification Opportunities for Daiwa Securities and Reservoir Media

0.26

Correlation Coefficient

Daiwa Securities  Reservoir Media

Modest diversification

The 3 months correlation between Daiwa and Reservoir is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Daiwa Securities Group and Reservoir Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reservoir Media and Daiwa Securities 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 Daiwa Securities Group 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 Daiwa Securities i.e., Daiwa Securities and Reservoir Media go up and down completely randomly.

Pair Corralation between Daiwa Securities and Reservoir Media

Assuming the 90 days horizon Daiwa Securities Group is expected to under-perform the Reservoir Media. But the pink sheet apears to be less risky and, when comparing its historical volatility, Daiwa Securities Group is 1.14 times less risky than Reservoir Media. The pink sheet trades about -0.28 of its potential returns per unit of risk. The Reservoir Media is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  944.00  in Reservoir Media on September 29, 2024 and sell it today you would lose (36.00) from holding Reservoir Media or give up 3.81% of portfolio value over 90 days.

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

Daiwa Securities Group  vs.  Reservoir Media

Daiwa Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daiwa Securities Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Reservoir Media

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Reservoir Media are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Reservoir Media reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Daiwa Securities and Reservoir Media

The main advantage of trading using opposite Daiwa Securities and Reservoir Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiwa Securities 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 Daiwa Securities Group 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.