Correlation Between REMEDY ENTERTAINMENT and Townsquare Media

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

By analyzing existing cross correlation between REMEDY ENTERTAINMENT OYJ and Townsquare Media, you can compare the effects of market volatilities on REMEDY ENTERTAINMENT and Townsquare Media 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 REMEDY ENTERTAINMENT with a short position of Townsquare Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of REMEDY ENTERTAINMENT and Townsquare Media.

Diversification Opportunities for REMEDY ENTERTAINMENT and Townsquare Media

0.73

Correlation Coefficient

REMEDY ENTERTAINMENT  Townsquare Media

Poor diversification

The 1 month correlation between REMEDY and Townsquare is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding REMEDY ENTERTAINMENT OYJ and Townsquare Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Townsquare Media and REMEDY ENTERTAINMENT 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 REMEDY ENTERTAINMENT OYJ are associated (or correlated) with Townsquare Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Townsquare Media has no effect on the direction of REMEDY ENTERTAINMENT i.e., REMEDY ENTERTAINMENT and Townsquare Media go up and down completely randomly.

Pair Corralation between REMEDY ENTERTAINMENT and Townsquare Media

Assuming the 90 days horizon REMEDY ENTERTAINMENT OYJ is expected to under-perform the Townsquare Media. But the stock apears to be less risky and, when comparing its historical volatility, REMEDY ENTERTAINMENT OYJ is 1.01 times less risky than Townsquare Media. The stock trades about -0.03 of its potential returns per unit of risk. The Townsquare Media is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  922.00  in Townsquare Media on January 26, 2024 and sell it today you would earn a total of  248.00  from holding Townsquare Media or generate 26.9% return on investment over 90 days.

Time Period	1 Month [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

REMEDY ENTERTAINMENT OYJ  vs.  Townsquare Media

REMEDY ENTERTAINMENT OYJ

Risk-Adjusted Performance

16 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in REMEDY ENTERTAINMENT OYJ are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, REMEDY ENTERTAINMENT may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Townsquare Media

Risk-Adjusted Performance

26 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Townsquare Media are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Townsquare Media reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with REMEDY ENTERTAINMENT and Townsquare Media

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

The idea behind REMEDY ENTERTAINMENT OYJ and Townsquare Media 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.