Correlation Between Sensient Technologies and RCS MediaGroup
Can any of the company-specific risk be diversified away by investing in both Sensient Technologies 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 Sensient Technologies and RCS MediaGroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensient Technologies and RCS MediaGroup SpA, you can compare the effects of market volatilities on Sensient Technologies 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 Sensient Technologies with a short position of RCS MediaGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and RCS MediaGroup.
Diversification Opportunities for Sensient Technologies and RCS MediaGroup
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sensient and RCS is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies 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 Sensient Technologies 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 Sensient Technologies 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 Sensient Technologies i.e., Sensient Technologies and RCS MediaGroup go up and down completely randomly.
Pair Corralation between Sensient Technologies and RCS MediaGroup
Considering the 90-day investment horizon Sensient Technologies is expected to generate 2.84 times less return on investment than RCS MediaGroup. In addition to that, Sensient Technologies is 1.15 times more volatile than RCS MediaGroup SpA. It trades about 0.04 of its total potential returns per unit of risk. RCS MediaGroup SpA is currently generating about 0.14 per unit of volatility. 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 |
Sensient Technologies vs. RCS MediaGroup SpA
Performance |
| Timeline |
| Sensient Technologies |
| RCS MediaGroup SpA |
Sensient Technologies and RCS MediaGroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensient Technologies and RCS MediaGroup
The main advantage of trading using opposite Sensient Technologies and RCS MediaGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies 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.| Sensient Technologies vs. SPACE | Sensient Technologies vs. Bayview Acquisition Corp | Sensient Technologies vs. T Rowe Price | Sensient Technologies vs. Ampleforth |
| RCS MediaGroup vs. Legible | RCS MediaGroup vs. Sylvania Platinum Limited | RCS MediaGroup vs. Thunderbird Entertainment Group | RCS MediaGroup vs. PAX Global Technology |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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