Correlation Between RCS MediaGroup and CECO Environmental

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

Diversification Opportunities for RCS MediaGroup and CECO Environmental

0.76

Correlation Coefficient

RCS MediaGroup  CECO Environmental

Poor diversification

The 3 months correlation between RCS and CECO is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and CECO Environmental Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CECO Environmental Corp 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 CECO Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CECO Environmental Corp has no effect on the direction of RCS MediaGroup i.e., RCS MediaGroup and CECO Environmental go up and down completely randomly.

Pair Corralation between RCS MediaGroup and CECO Environmental

Assuming the 90 days horizon RCS MediaGroup SpA is expected to generate 1.83 times more return on investment than CECO Environmental. However, RCS MediaGroup is 1.83 times more volatile than CECO Environmental Corp. It trades about 0.04 of its potential returns per unit of risk. CECO Environmental Corp is currently generating about 0.07 per unit of risk. If you would invest  68.00  in RCS MediaGroup SpA on September 30, 2024 and sell it today you would earn a total of  20.00  from holding RCS MediaGroup SpA or generate 29.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	67.81%
Values	Daily Returns

RCS MediaGroup SpA  vs.  CECO Environmental Corp

RCS MediaGroup SpA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RCS MediaGroup SpA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, RCS MediaGroup is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CECO Environmental Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CECO Environmental Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, CECO Environmental may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with RCS MediaGroup and CECO Environmental

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

The idea behind RCS MediaGroup SpA and CECO Environmental Corp 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.