Correlation Between Rand Capital and Reservoir Media

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

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

Diversification Opportunities for Rand Capital and Reservoir Media

-0.14

Correlation Coefficient

Rand Capital  Reservoir Media

Good diversification

The 3 months correlation between Rand and Reservoir is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Rand Capital Corp and Reservoir Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reservoir Media and Rand Capital 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 Rand Capital Corp 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 Rand Capital i.e., Rand Capital and Reservoir Media go up and down completely randomly.

Pair Corralation between Rand Capital and Reservoir Media

Given the investment horizon of 90 days Rand Capital Corp is expected to generate 1.06 times more return on investment than Reservoir Media. However, Rand Capital is 1.06 times more volatile than Reservoir Media. It trades about 0.1 of its potential returns per unit of risk. Reservoir Media is currently generating about 0.06 per unit of risk. If you would invest  961.00  in Rand Capital Corp on October 15, 2024 and sell it today you would earn a total of  958.00  from holding Rand Capital Corp or generate 99.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.43%
Values	Daily Returns

Rand Capital Corp  vs.  Reservoir Media

Rand Capital Corp

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rand Capital Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Rand Capital exhibited 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 latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Rand Capital and Reservoir Media

The main advantage of trading using opposite Rand Capital and Reservoir Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rand Capital 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 Rand Capital Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.