Correlation Between RCS MediaGroup and OAKRIDGE INTERNATIONAL

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

Diversification Opportunities for RCS MediaGroup and OAKRIDGE INTERNATIONAL

0.17

Correlation Coefficient

RCS MediaGroup  OAKRIDGE INTERNATIONAL

Average diversification

The 3 months correlation between RCS and OAKRIDGE is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and OAKRIDGE INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OAKRIDGE INTERNATIONAL 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 OAKRIDGE INTERNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OAKRIDGE INTERNATIONAL has no effect on the direction of RCS MediaGroup i.e., RCS MediaGroup and OAKRIDGE INTERNATIONAL go up and down completely randomly.

Pair Corralation between RCS MediaGroup and OAKRIDGE INTERNATIONAL

Assuming the 90 days trading horizon RCS MediaGroup is expected to generate 7.49 times less return on investment than OAKRIDGE INTERNATIONAL. But when comparing it to its historical volatility, RCS MediaGroup SpA is 7.39 times less risky than OAKRIDGE INTERNATIONAL. It trades about 0.06 of its potential returns per unit of risk. OAKRIDGE INTERNATIONAL is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3.35  in OAKRIDGE INTERNATIONAL on October 9, 2024 and sell it today you would lose (0.45) from holding OAKRIDGE INTERNATIONAL or give up 13.43% of portfolio value over 90 days.

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

RCS MediaGroup SpA  vs.  OAKRIDGE INTERNATIONAL

RCS MediaGroup SpA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RCS MediaGroup SpA are ranked lower than 9 (%) 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.

OAKRIDGE INTERNATIONAL

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in OAKRIDGE INTERNATIONAL are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, OAKRIDGE INTERNATIONAL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RCS MediaGroup and OAKRIDGE INTERNATIONAL

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

The idea behind RCS MediaGroup SpA and OAKRIDGE INTERNATIONAL 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.