Correlation Between RCS MediaGroup and Emerson Radio

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

Diversification Opportunities for RCS MediaGroup and Emerson Radio

-0.71

Correlation Coefficient

RCS MediaGroup  Emerson Radio

Pay attention - limited upside

The 3 months correlation between RCS and Emerson is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio 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 Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of RCS MediaGroup i.e., RCS MediaGroup and Emerson Radio go up and down completely randomly.

Pair Corralation between RCS MediaGroup and Emerson Radio

Assuming the 90 days horizon RCS MediaGroup SpA is expected to generate 1.9 times more return on investment than Emerson Radio. However, RCS MediaGroup is 1.9 times more volatile than Emerson Radio. It trades about 0.04 of its potential returns per unit of risk. Emerson Radio is currently generating about 0.0 per unit of risk. If you would invest  68.00  in RCS MediaGroup SpA on September 19, 2024 and sell it today you would earn a total of  25.00  from holding RCS MediaGroup SpA or generate 36.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	67.47%
Values	Daily Returns

RCS MediaGroup SpA  vs.  Emerson Radio

RCS MediaGroup SpA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RCS MediaGroup SpA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, RCS MediaGroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Emerson Radio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerson Radio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with RCS MediaGroup and Emerson Radio

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

The idea behind RCS MediaGroup SpA and Emerson Radio 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.