Correlation Between LB Foster and RCS MediaGroup

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

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

Diversification Opportunities for LB Foster and RCS MediaGroup

-0.7

Correlation Coefficient

LB Foster  RCS MediaGroup

Excellent diversification

The 3 months correlation between FSTR and RCS is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster 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 LB Foster 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 LB Foster 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 LB Foster i.e., LB Foster and RCS MediaGroup go up and down completely randomly.

Pair Corralation between LB Foster and RCS MediaGroup

Given the investment horizon of 90 days LB Foster is expected to under-perform the RCS MediaGroup. In addition to that, LB Foster is 1.29 times more volatile than RCS MediaGroup SpA. It trades about -0.13 of its total potential returns per unit of risk. RCS MediaGroup SpA is currently generating about 0.17 per unit of volatility. If you would invest  89.00  in RCS MediaGroup SpA on December 23, 2024 and sell it today you would earn a total of  24.00  from holding RCS MediaGroup SpA or generate 26.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.85%
Values	Daily Returns

LB Foster  vs.  RCS MediaGroup SpA

LB Foster

Risk-Adjusted Performance

Very Weak

Over the last 90 days LB Foster has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, RCS MediaGroup reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LB Foster and RCS MediaGroup

The main advantage of trading using opposite LB Foster and RCS MediaGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster 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 LB Foster 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.