Correlation Between RCS MediaGroup and FP Newspapers

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

Diversification Opportunities for RCS MediaGroup and FP Newspapers

-0.67

Correlation Coefficient

RCS MediaGroup  FP Newspapers

Excellent diversification

The 3 months correlation between RCS and FPNUF is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and FP Newspapers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FP Newspapers 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 FP Newspapers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FP Newspapers has no effect on the direction of RCS MediaGroup i.e., RCS MediaGroup and FP Newspapers go up and down completely randomly.

Pair Corralation between RCS MediaGroup and FP Newspapers

Assuming the 90 days horizon RCS MediaGroup SpA is expected to under-perform the FP Newspapers. In addition to that, RCS MediaGroup is 2.59 times more volatile than FP Newspapers. It trades about -0.1 of its total potential returns per unit of risk. FP Newspapers is currently generating about -0.22 per unit of volatility. If you would invest  38.00  in FP Newspapers on October 12, 2024 and sell it today you would lose (1.00) from holding FP Newspapers or give up 2.63% of portfolio value over 90 days.

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

RCS MediaGroup SpA  vs.  FP Newspapers

RCS MediaGroup SpA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RCS MediaGroup SpA are ranked lower than 2 (%) 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.

FP Newspapers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FP Newspapers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with RCS MediaGroup and FP Newspapers

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

The idea behind RCS MediaGroup SpA and FP Newspapers 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.