Correlation Between Reservoir Media and Able View

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

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

Diversification Opportunities for Reservoir Media and Able View

-0.63

Correlation Coefficient

Reservoir Media  Able View

Excellent diversification

The 3 months correlation between Reservoir and Able is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Reservoir Media and Able View Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Able View Global and Reservoir 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 Reservoir Media are associated (or correlated) with Able View. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Able View Global has no effect on the direction of Reservoir Media i.e., Reservoir Media and Able View go up and down completely randomly.

Pair Corralation between Reservoir Media and Able View

Given the investment horizon of 90 days Reservoir Media is expected to under-perform the Able View. But the stock apears to be less risky and, when comparing its historical volatility, Reservoir Media is 2.74 times less risky than Able View. The stock trades about -0.03 of its potential returns per unit of risk. The Able View Global is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  93.00  in Able View Global on October 23, 2024 and sell it today you would earn a total of  15.00  from holding Able View Global or generate 16.13% return on investment over 90 days.

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

Reservoir Media  vs.  Able View Global

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.

Able View Global

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Able View Global are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Able View showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Reservoir Media and Able View

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

The idea behind Reservoir Media and Able View Global 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 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.