Correlation Between Prosiebensat and RTL Group

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

By analyzing existing cross correlation between Prosiebensat 1 Media and RTL Group SA, you can compare the effects of market volatilities on Prosiebensat 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 Prosiebensat with a short position of RTL Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosiebensat and RTL Group.

Diversification Opportunities for Prosiebensat and RTL Group

0.87

Correlation Coefficient

Prosiebensat  RTL Group

Very poor diversification

The 3 months correlation between Prosiebensat and RTL is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media 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 Prosiebensat 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 Prosiebensat 1 Media 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 Prosiebensat i.e., Prosiebensat and RTL Group go up and down completely randomly.

Pair Corralation between Prosiebensat and RTL Group

Assuming the 90 days trading horizon Prosiebensat 1 Media is expected to under-perform the RTL Group. In addition to that, Prosiebensat is 1.14 times more volatile than RTL Group SA. It trades about -0.1 of its total potential returns per unit of risk. RTL Group SA is currently generating about -0.07 per unit of volatility. If you would invest  3,030  in RTL Group SA on October 10, 2024 and sell it today you would lose (300.00) from holding RTL Group SA or give up 9.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Prosiebensat 1 Media  vs.  RTL Group SA

Prosiebensat 1 Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosiebensat 1 Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

RTL Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RTL Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Prosiebensat and RTL Group

The main advantage of trading using opposite Prosiebensat and RTL Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosiebensat 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 Prosiebensat 1 Media 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.