Correlation Between RCS MediaGroup and ABBVIE

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

Diversification Opportunities for RCS MediaGroup and ABBVIE

-0.08

Correlation Coefficient

RCS MediaGroup  ABBVIE

Good diversification

The 3 months correlation between RCS and ABBVIE is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and ABBVIE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABBVIE INC 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 ABBVIE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABBVIE INC has no effect on the direction of RCS MediaGroup i.e., RCS MediaGroup and ABBVIE go up and down completely randomly.

Pair Corralation between RCS MediaGroup and ABBVIE

Assuming the 90 days horizon RCS MediaGroup SpA is expected to generate 2.45 times more return on investment than ABBVIE. However, RCS MediaGroup is 2.45 times more volatile than ABBVIE INC. It trades about 0.18 of its potential returns per unit of risk. ABBVIE INC is currently generating about 0.0 per unit of risk. If you would invest  88.00  in RCS MediaGroup SpA on December 30, 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 Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

RCS MediaGroup SpA  vs.  ABBVIE INC

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.

ABBVIE INC

Risk-Adjusted Performance

OK

Over the last 90 days ABBVIE INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ABBVIE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RCS MediaGroup and ABBVIE

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

The idea behind RCS MediaGroup SpA and ABBVIE INC 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..