Correlation Between RCS MediaGroup and MGP Ingredients

Can any of the company-specific risk be diversified away by investing in both RCS MediaGroup and MGP Ingredients 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 MGP Ingredients 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 MGP Ingredients, you can compare the effects of market volatilities on RCS MediaGroup and MGP Ingredients 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 MGP Ingredients. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCS MediaGroup and MGP Ingredients.

Diversification Opportunities for RCS MediaGroup and MGP Ingredients

0.0

Correlation Coefficient

RCS MediaGroup  MGP Ingredients

Pay attention - limited upside

The 3 months correlation between RCS and MGP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and MGP Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGP Ingredients 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 MGP Ingredients. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGP Ingredients has no effect on the direction of RCS MediaGroup i.e., RCS MediaGroup and MGP Ingredients go up and down completely randomly.

Pair Corralation between RCS MediaGroup and MGP Ingredients

If you would invest  85.00  in RCS MediaGroup SpA on December 20, 2024 and sell it today you would earn a total of  19.00  from holding RCS MediaGroup SpA or generate 22.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

RCS MediaGroup SpA  vs.  MGP Ingredients

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 unsteady forward indicators, RCS MediaGroup reported solid returns over the last few months and may actually be approaching a breakup point.

MGP Ingredients

Risk-Adjusted Performance

Very Weak

Over the last 90 days MGP Ingredients has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, MGP Ingredients is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with RCS MediaGroup and MGP Ingredients

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

The idea behind RCS MediaGroup SpA and MGP Ingredients 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.