Correlation Between Reservoir Media and Copa Holdings

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Can any of the company-specific risk be diversified away by investing in both Reservoir Media and Copa Holdings 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 Copa Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reservoir Media and Copa Holdings SA, you can compare the effects of market volatilities on Reservoir Media and Copa Holdings 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 Copa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reservoir Media and Copa Holdings.

Diversification Opportunities for Reservoir Media and Copa Holdings

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Reservoir and Copa is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Reservoir Media and Copa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copa Holdings SA 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 Copa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copa Holdings SA has no effect on the direction of Reservoir Media i.e., Reservoir Media and Copa Holdings go up and down completely randomly.

Pair Corralation between Reservoir Media and Copa Holdings

Given the investment horizon of 90 days Reservoir Media is expected to generate 0.58 times more return on investment than Copa Holdings. However, Reservoir Media is 1.73 times less risky than Copa Holdings. It trades about 0.1 of its potential returns per unit of risk. Copa Holdings SA is currently generating about -0.11 per unit of risk. If you would invest  911.00  in Reservoir Media on September 12, 2024 and sell it today you would earn a total of  35.00  from holding Reservoir Media or generate 3.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Reservoir Media  vs.  Copa Holdings SA

 Performance 
       Timeline  
Reservoir Media 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Reservoir Media are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Reservoir Media reported solid returns over the last few months and may actually be approaching a breakup point.
Copa Holdings SA 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Copa Holdings SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Copa Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Reservoir Media and Copa Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Reservoir Media and Copa Holdings

The main advantage of trading using opposite Reservoir Media and Copa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reservoir Media position performs unexpectedly, Copa Holdings 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 Copa Holdings will offset losses from the drop in Copa Holdings' long position.
The idea behind Reservoir Media and Copa Holdings SA 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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