Correlation Between RCS MediaGroup and COUSINS PTIES

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

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

Diversification Opportunities for RCS MediaGroup and COUSINS PTIES

-0.62

Correlation Coefficient

RCS MediaGroup  COUSINS PTIES

Excellent diversification

The 3 months correlation between RCS and COUSINS is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and COUSINS PTIES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COUSINS PTIES INC and RCS MediaGroup 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 RCS MediaGroup SpA are associated (or correlated) with COUSINS PTIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COUSINS PTIES INC has no effect on the direction of RCS MediaGroup i.e., RCS MediaGroup and COUSINS PTIES go up and down completely randomly.

Pair Corralation between RCS MediaGroup and COUSINS PTIES

Assuming the 90 days trading horizon RCS MediaGroup SpA is expected to generate 1.33 times more return on investment than COUSINS PTIES. However, RCS MediaGroup is 1.33 times more volatile than COUSINS PTIES INC. It trades about 0.15 of its potential returns per unit of risk. COUSINS PTIES INC is currently generating about -0.05 per unit of risk. If you would invest  85.00  in RCS MediaGroup SpA on December 20, 2024 and sell it today you would earn a total of  17.00  from holding RCS MediaGroup SpA or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

RCS MediaGroup SpA  vs.  COUSINS PTIES INC

RCS MediaGroup SpA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RCS MediaGroup SpA are ranked lower than 11 (%) 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.

COUSINS PTIES INC

Risk-Adjusted Performance

Very Weak

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

Pair Trading with RCS MediaGroup and COUSINS PTIES

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

The idea behind RCS MediaGroup SpA and COUSINS PTIES INC 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.