Correlation Between ProSiebenSat1 Media and RTL Group

Can any of the company-specific risk be diversified away by investing in both ProSiebenSat1 Media and RTL Group 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 ProSiebenSat1 Media and RTL Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ProSiebenSat1 Media AG and RTL Group SA, you can compare the effects of market volatilities on ProSiebenSat1 Media and RTL Group 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 ProSiebenSat1 Media with a short position of RTL Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProSiebenSat1 Media and RTL Group.

Diversification Opportunities for ProSiebenSat1 Media and RTL Group

0.65

Correlation Coefficient

ProSiebenSat1 Media  RTL Group

Poor diversification

The 3 months correlation between ProSiebenSat1 and RTL is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ProSiebenSat1 Media AG and RTL Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL Group SA and ProSiebenSat1 Media 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 ProSiebenSat1 Media AG are associated (or correlated) with RTL Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL Group SA has no effect on the direction of ProSiebenSat1 Media i.e., ProSiebenSat1 Media and RTL Group go up and down completely randomly.

Pair Corralation between ProSiebenSat1 Media and RTL Group

Assuming the 90 days horizon ProSiebenSat1 Media AG is expected to generate 2.03 times more return on investment than RTL Group. However, ProSiebenSat1 Media is 2.03 times more volatile than RTL Group SA. It trades about 0.1 of its potential returns per unit of risk. RTL Group SA is currently generating about 0.09 per unit of risk. If you would invest  129.00  in ProSiebenSat1 Media AG on December 30, 2024 and sell it today you would earn a total of  25.00  from holding ProSiebenSat1 Media AG or generate 19.38% return on investment over 90 days.

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

ProSiebenSat1 Media AG  vs.  RTL Group SA

ProSiebenSat1 Media

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProSiebenSat1 Media AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, ProSiebenSat1 Media showed solid returns over the last few months and may actually be approaching a breakup point.

RTL Group SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RTL Group SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, RTL Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ProSiebenSat1 Media and RTL Group

The main advantage of trading using opposite ProSiebenSat1 Media and RTL Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProSiebenSat1 Media position performs unexpectedly, RTL Group 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 RTL Group will offset losses from the drop in RTL Group's long position.

The idea behind ProSiebenSat1 Media AG and RTL Group SA 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.