Correlation Between Reservoir Media and Daiwa Securities

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

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

Diversification Opportunities for Reservoir Media and Daiwa Securities

0.29

Correlation Coefficient

Reservoir Media  Daiwa Securities

Modest diversification

The 3 months correlation between Reservoir and Daiwa is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Reservoir Media and Daiwa Securities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiwa Securities 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 Daiwa Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiwa Securities has no effect on the direction of Reservoir Media i.e., Reservoir Media and Daiwa Securities go up and down completely randomly.

Pair Corralation between Reservoir Media and Daiwa Securities

Given the investment horizon of 90 days Reservoir Media is expected to generate 1.14 times more return on investment than Daiwa Securities. However, Reservoir Media is 1.14 times more volatile than Daiwa Securities Group. It trades about -0.06 of its potential returns per unit of risk. Daiwa Securities Group is currently generating about -0.28 per unit of risk. 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

Reservoir Media  vs.  Daiwa Securities Group

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.

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 weak 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.

Pair Trading with Reservoir Media and Daiwa Securities

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

The idea behind Reservoir Media and Daiwa Securities Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.