Correlation Between Reservoir Media and Brilliance China
Can any of the company-specific risk be diversified away by investing in both Reservoir Media and Brilliance China 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 Brilliance China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reservoir Media and Brilliance China Automotive, you can compare the effects of market volatilities on Reservoir Media and Brilliance China 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 Brilliance China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reservoir Media and Brilliance China.
Diversification Opportunities for Reservoir Media and Brilliance China
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Reservoir and Brilliance is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Reservoir Media and Brilliance China Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brilliance China Aut 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 Brilliance China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brilliance China Aut has no effect on the direction of Reservoir Media i.e., Reservoir Media and Brilliance China go up and down completely randomly.
Pair Corralation between Reservoir Media and Brilliance China
Given the investment horizon of 90 days Reservoir Media is expected to generate 0.34 times more return on investment than Brilliance China. However, Reservoir Media is 2.92 times less risky than Brilliance China. It trades about 0.33 of its potential returns per unit of risk. Brilliance China Automotive is currently generating about -0.33 per unit of risk. If you would invest 825.00 in Reservoir Media on September 2, 2024 and sell it today you would earn a total of 119.00 from holding Reservoir Media or generate 14.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 19.05% |
| Values | Daily Returns |
Reservoir Media vs. Brilliance China Automotive
Performance |
| Timeline |
| Reservoir Media |
| Brilliance China Aut |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Reservoir Media and Brilliance China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reservoir Media and Brilliance China
The main advantage of trading using opposite Reservoir Media and Brilliance China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reservoir Media position performs unexpectedly, Brilliance China 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 Brilliance China will offset losses from the drop in Brilliance China's long position.| Reservoir Media vs. Reading International | Reservoir Media vs. Marcus | Reservoir Media vs. Gaia Inc | Reservoir Media vs. News Corp B |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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