Correlation Between Reservoir Media and Sea

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

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

Diversification Opportunities for Reservoir Media and Sea

-0.62

Correlation Coefficient

Reservoir Media  Sea

Excellent diversification

The 3 months correlation between Reservoir and Sea is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Reservoir Media and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea 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 Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of Reservoir Media i.e., Reservoir Media and Sea go up and down completely randomly.

Pair Corralation between Reservoir Media and Sea

Given the investment horizon of 90 days Reservoir Media is expected to under-perform the Sea. But the stock apears to be less risky and, when comparing its historical volatility, Reservoir Media is 1.54 times less risky than Sea. The stock trades about -0.17 of its potential returns per unit of risk. The Sea is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  10,965  in Sea on December 25, 2024 and sell it today you would earn a total of  1,983  from holding Sea or generate 18.08% 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.  Sea

Reservoir Media

Risk-Adjusted Performance

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 inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Sea

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Reservoir Media and Sea

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

The idea behind Reservoir Media and Sea 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.