Correlation Between RCS MediaGroup and Dermapharm Holding

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both RCS MediaGroup and Dermapharm 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 Dermapharm 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 Dermapharm Holding SE, you can compare the effects of market volatilities on RCS MediaGroup and Dermapharm 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 Dermapharm Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCS MediaGroup and Dermapharm Holding.

Diversification Opportunities for RCS MediaGroup and Dermapharm Holding

-0.54
  Correlation Coefficient

Excellent diversification

The 3 months correlation between RCS and Dermapharm is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and Dermapharm Holding SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dermapharm 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 Dermapharm Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dermapharm Holding has no effect on the direction of RCS MediaGroup i.e., RCS MediaGroup and Dermapharm Holding go up and down completely randomly.

Pair Corralation between RCS MediaGroup and Dermapharm Holding

Assuming the 90 days trading horizon RCS MediaGroup SpA is expected to generate 1.61 times more return on investment than Dermapharm Holding. However, RCS MediaGroup is 1.61 times more volatile than Dermapharm Holding SE. It trades about 0.09 of its potential returns per unit of risk. Dermapharm Holding SE is currently generating about -0.06 per unit of risk. If you would invest  88.00  in RCS MediaGroup SpA on April 23, 2025 and sell it today you would earn a total of  12.00  from holding RCS MediaGroup SpA or generate 13.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy98.44%
ValuesDaily Returns

RCS MediaGroup SpA  vs.  Dermapharm Holding SE

 Performance 
       Timeline  
RCS MediaGroup SpA 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in RCS MediaGroup SpA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, RCS MediaGroup reported solid returns over the last few months and may actually be approaching a breakup point.
Dermapharm Holding 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Dermapharm Holding SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

RCS MediaGroup and Dermapharm Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with RCS MediaGroup and Dermapharm Holding

The main advantage of trading using opposite RCS MediaGroup and Dermapharm Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCS MediaGroup position performs unexpectedly, Dermapharm 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 Dermapharm Holding will offset losses from the drop in Dermapharm Holding's long position.
The idea behind RCS MediaGroup SpA and Dermapharm Holding SE 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.
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

Other Complementary Tools

Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Fundamental Analysis
View fundamental data based on most recent published financial statements
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios