Correlation Between Slate Office and RCS MediaGroup

Can any of the company-specific risk be diversified away by investing in both Slate Office and RCS MediaGroup 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 Slate Office and RCS MediaGroup into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Slate Office REIT and RCS MediaGroup SpA, you can compare the effects of market volatilities on Slate Office and RCS MediaGroup 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 Slate Office with a short position of RCS MediaGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Slate Office and RCS MediaGroup.

Diversification Opportunities for Slate Office and RCS MediaGroup

0.01

Correlation Coefficient

Slate Office  RCS MediaGroup

Significant diversification

The 3 months correlation between Slate and RCS is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Slate Office REIT and RCS MediaGroup SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCS MediaGroup SpA and Slate Office 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 Slate Office REIT are associated (or correlated) with RCS MediaGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCS MediaGroup SpA has no effect on the direction of Slate Office i.e., Slate Office and RCS MediaGroup go up and down completely randomly.

Pair Corralation between Slate Office and RCS MediaGroup

Assuming the 90 days horizon Slate Office REIT is expected to under-perform the RCS MediaGroup. In addition to that, Slate Office is 3.45 times more volatile than RCS MediaGroup SpA. It trades about -0.01 of its total potential returns per unit of risk. RCS MediaGroup SpA is currently generating about 0.08 per unit of volatility. If you would invest  74.00  in RCS MediaGroup SpA on September 16, 2024 and sell it today you would earn a total of  19.00  from holding RCS MediaGroup SpA or generate 25.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	69.88%
Values	Daily Returns

Slate Office REIT  vs.  RCS MediaGroup SpA

Slate Office REIT

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Slate Office REIT are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Slate Office reported solid returns over the last few months and may actually be approaching a breakup point.

RCS MediaGroup SpA

Risk-Adjusted Performance

14 of 100

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.

Pair Trading with Slate Office and RCS MediaGroup

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

The idea behind Slate Office REIT and RCS MediaGroup SpA 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.