Correlation Between RCS MediaGroup and Sensient Technologies
Can any of the company-specific risk be diversified away by investing in both RCS MediaGroup and Sensient Technologies 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 Sensient Technologies 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 Sensient Technologies, you can compare the effects of market volatilities on RCS MediaGroup and Sensient Technologies 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 Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCS MediaGroup and Sensient Technologies.
Diversification Opportunities for RCS MediaGroup and Sensient Technologies
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RCS and Sensient is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies 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 Sensient Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensient Technologies has no effect on the direction of RCS MediaGroup i.e., RCS MediaGroup and Sensient Technologies go up and down completely randomly.
Pair Corralation between RCS MediaGroup and Sensient Technologies
Assuming the 90 days horizon RCS MediaGroup SpA is expected to generate 0.87 times more return on investment than Sensient Technologies. However, RCS MediaGroup SpA is 1.15 times less risky than Sensient Technologies. It trades about 0.14 of its potential returns per unit of risk. Sensient Technologies is currently generating about 0.04 per unit of risk. If you would invest 80.00 in RCS MediaGroup SpA on September 3, 2024 and sell it today you would earn a total of 9.00 from holding RCS MediaGroup SpA or generate 11.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCS MediaGroup SpA vs. Sensient Technologies
Performance |
| Timeline |
| RCS MediaGroup SpA |
| Sensient Technologies |
RCS MediaGroup and Sensient Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCS MediaGroup and Sensient Technologies
The main advantage of trading using opposite RCS MediaGroup and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCS MediaGroup position performs unexpectedly, Sensient Technologies 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 Sensient Technologies will offset losses from the drop in Sensient Technologies' long position.| RCS MediaGroup vs. Legible | RCS MediaGroup vs. Sylvania Platinum Limited | RCS MediaGroup vs. Thunderbird Entertainment Group | RCS MediaGroup vs. PAX Global Technology |
| Sensient Technologies vs. SPACE | Sensient Technologies vs. Bayview Acquisition Corp | Sensient Technologies vs. T Rowe Price | Sensient Technologies vs. Ampleforth |
Check out your portfolio center.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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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