Correlation Between Superior Plus and RCS MediaGroup

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

By analyzing existing cross correlation between Superior Plus Corp and RCS MediaGroup SpA, you can compare the effects of market volatilities on Superior Plus and RCS MediaGroup 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 Superior Plus with a short position of RCS MediaGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and RCS MediaGroup.

Diversification Opportunities for Superior Plus and RCS MediaGroup

0.13

Correlation Coefficient

Superior Plus  RCS MediaGroup

Average diversification

The 3 months correlation between Superior and RCS is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and RCS MediaGroup SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCS MediaGroup SpA and Superior Plus 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 Superior Plus Corp are associated (or correlated) with RCS MediaGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCS MediaGroup SpA has no effect on the direction of Superior Plus i.e., Superior Plus and RCS MediaGroup go up and down completely randomly.

Pair Corralation between Superior Plus and RCS MediaGroup

Assuming the 90 days horizon Superior Plus is expected to generate 21.14 times less return on investment than RCS MediaGroup. But when comparing it to its historical volatility, Superior Plus Corp is 1.08 times less risky than RCS MediaGroup. It trades about 0.01 of its potential returns per unit of risk. RCS MediaGroup SpA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  85.00  in RCS MediaGroup SpA on December 21, 2024 and sell it today you would earn a total of  18.00  from holding RCS MediaGroup SpA or generate 21.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Superior Plus Corp  vs.  RCS MediaGroup SpA

Superior Plus Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Superior Plus is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

RCS MediaGroup SpA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RCS MediaGroup SpA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, RCS MediaGroup reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Superior Plus and RCS MediaGroup

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

The idea behind Superior Plus Corp and RCS MediaGroup SpA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.