Correlation Between Hurco Companies and RCS MediaGroup

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

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

Diversification Opportunities for Hurco Companies and RCS MediaGroup

0.89

Correlation Coefficient

Hurco Companies  RCS MediaGroup

Very poor diversification

The 3 months correlation between Hurco and RCS is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Hurco Companies 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 Hurco Companies 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 Hurco Companies 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 Hurco Companies i.e., Hurco Companies and RCS MediaGroup go up and down completely randomly.

Pair Corralation between Hurco Companies and RCS MediaGroup

Given the investment horizon of 90 days Hurco Companies is expected to generate 15.24 times less return on investment than RCS MediaGroup. But when comparing it to its historical volatility, Hurco Companies is 2.55 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 0.04 of returns per unit of risk over similar time horizon. If you would invest  66.00  in RCS MediaGroup SpA on September 4, 2024 and sell it today you would earn a total of  23.00  from holding RCS MediaGroup SpA or generate 34.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	67.47%
Values	Daily Returns

Hurco Companies  vs.  RCS MediaGroup SpA

Hurco Companies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hurco Companies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Hurco Companies exhibited solid returns over the last few months and may actually be approaching a breakup point.

RCS MediaGroup SpA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RCS MediaGroup SpA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, RCS MediaGroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hurco Companies and RCS MediaGroup

The main advantage of trading using opposite Hurco Companies and RCS MediaGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hurco Companies 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 Hurco Companies 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.