Correlation Between RCS MediaGroup and Eldorado Gold

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

Diversification Opportunities for RCS MediaGroup and Eldorado Gold

0.32

Correlation Coefficient

RCS MediaGroup  Eldorado Gold

Weak diversification

The 3 months correlation between RCS and Eldorado is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and Eldorado Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eldorado Gold 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 Eldorado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eldorado Gold Corp has no effect on the direction of RCS MediaGroup i.e., RCS MediaGroup and Eldorado Gold go up and down completely randomly.

Pair Corralation between RCS MediaGroup and Eldorado Gold

Assuming the 90 days horizon RCS MediaGroup SpA is expected to generate 0.73 times more return on investment than Eldorado Gold. However, RCS MediaGroup SpA is 1.36 times less risky than Eldorado Gold. It trades about 0.19 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about 0.08 per unit of risk. If you would invest  88.00  in RCS MediaGroup SpA on December 28, 2024 and sell it today you would earn a total of  25.00  from holding RCS MediaGroup SpA or generate 28.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

RCS MediaGroup SpA  vs.  Eldorado Gold Corp

RCS MediaGroup SpA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RCS MediaGroup SpA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, RCS MediaGroup reported solid returns over the last few months and may actually be approaching a breakup point.

Eldorado Gold Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eldorado Gold Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, Eldorado Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RCS MediaGroup and Eldorado Gold

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

The idea behind RCS MediaGroup SpA and Eldorado Gold 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.