Correlation Between ProSiebenSat1 Media and RTL Group

Can any of the company-specific risk be diversified away by investing in both ProSiebenSat1 Media and RTL Group 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 ProSiebenSat1 Media and RTL Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ProSiebenSat1 Media AG and RTL Group SA, you can compare the effects of market volatilities on ProSiebenSat1 Media and RTL Group 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 ProSiebenSat1 Media with a short position of RTL Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProSiebenSat1 Media and RTL Group.

Diversification Opportunities for ProSiebenSat1 Media and RTL Group

0.55

Correlation Coefficient

ProSiebenSat1 Media  RTL Group

Very weak diversification

The 3 months correlation between ProSiebenSat1 and RTL is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding ProSiebenSat1 Media AG and RTL Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL Group SA and ProSiebenSat1 Media 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 ProSiebenSat1 Media AG are associated (or correlated) with RTL Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL Group SA has no effect on the direction of ProSiebenSat1 Media i.e., ProSiebenSat1 Media and RTL Group go up and down completely randomly.

Pair Corralation between ProSiebenSat1 Media and RTL Group

Assuming the 90 days horizon ProSiebenSat1 Media AG is expected to under-perform the RTL Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, ProSiebenSat1 Media AG is 1.43 times less risky than RTL Group. The pink sheet trades about -0.04 of its potential returns per unit of risk. The RTL Group SA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  460.00  in RTL Group SA on August 31, 2024 and sell it today you would lose (161.00) from holding RTL Group SA or give up 35.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	69.05%
Values	Daily Returns

ProSiebenSat1 Media AG  vs.  RTL Group SA

ProSiebenSat1 Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProSiebenSat1 Media AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

RTL Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RTL Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ProSiebenSat1 Media and RTL Group

The main advantage of trading using opposite ProSiebenSat1 Media and RTL Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProSiebenSat1 Media position performs unexpectedly, RTL Group 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 RTL Group will offset losses from the drop in RTL Group's long position.

The idea behind ProSiebenSat1 Media AG and RTL Group SA 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.