Correlation Between Stereo Vision and Social Detention

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

By analyzing existing cross correlation between Stereo Vision Entertainment and Social Detention, you can compare the effects of market volatilities on Stereo Vision and Social Detention 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 Stereo Vision with a short position of Social Detention. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stereo Vision and Social Detention.

Diversification Opportunities for Stereo Vision and Social Detention

-0.3

Correlation Coefficient

Stereo Vision  Social Detention

Very good diversification

The 3 months correlation between Stereo and Social is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Stereo Vision Entertainment and Social Detention in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Social Detention and Stereo Vision 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 Stereo Vision Entertainment are associated (or correlated) with Social Detention. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Social Detention has no effect on the direction of Stereo Vision i.e., Stereo Vision and Social Detention go up and down completely randomly.

Pair Corralation between Stereo Vision and Social Detention

Given the investment horizon of 90 days Stereo Vision Entertainment is expected to under-perform the Social Detention. But the pink sheet apears to be less risky and, when comparing its historical volatility, Stereo Vision Entertainment is 5.27 times less risky than Social Detention. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Social Detention is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1.80  in Social Detention on September 5, 2024 and sell it today you would lose (1.52) from holding Social Detention or give up 84.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Stereo Vision Entertainment  vs.  Social Detention

Stereo Vision Entert

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stereo Vision Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Social Detention

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Social Detention has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak fundamental indicators, Social Detention may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Stereo Vision and Social Detention

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

The idea behind Stereo Vision Entertainment and Social Detention 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.