Correlation Between RCS MediaGroup and Raytech Holding

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

Diversification Opportunities for RCS MediaGroup and Raytech Holding

-0.69

Correlation Coefficient

RCS MediaGroup  Raytech Holding

Excellent diversification

The 3 months correlation between RCS and Raytech is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and Raytech Holding Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytech Holding 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 Raytech Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytech Holding has no effect on the direction of RCS MediaGroup i.e., RCS MediaGroup and Raytech Holding go up and down completely randomly.

Pair Corralation between RCS MediaGroup and Raytech Holding

Assuming the 90 days horizon RCS MediaGroup SpA is expected to generate 0.31 times more return on investment than Raytech Holding. However, RCS MediaGroup SpA is 3.27 times less risky than Raytech Holding. It trades about 0.15 of its potential returns per unit of risk. Raytech Holding Limited is currently generating about -0.09 per unit of risk. If you would invest  82.00  in RCS MediaGroup SpA on September 12, 2024 and sell it today you would earn a total of  11.00  from holding RCS MediaGroup SpA or generate 13.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

RCS MediaGroup SpA  vs.  Raytech Holding Limited

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 reported solid returns over the last few months and may actually be approaching a breakup point.

Raytech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raytech Holding Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with RCS MediaGroup and Raytech Holding

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

The idea behind RCS MediaGroup SpA and Raytech Holding Limited 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.