Correlation Between RCS MediaGroup and SinoMedia Holding

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

Diversification Opportunities for RCS MediaGroup and SinoMedia Holding

0.64

Correlation Coefficient

RCS MediaGroup  SinoMedia Holding

Poor diversification

The 3 months correlation between RCS and SinoMedia is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and SinoMedia Holding Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SinoMedia 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 SinoMedia Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SinoMedia Holding has no effect on the direction of RCS MediaGroup i.e., RCS MediaGroup and SinoMedia Holding go up and down completely randomly.

Pair Corralation between RCS MediaGroup and SinoMedia Holding

Assuming the 90 days trading horizon RCS MediaGroup SpA is expected to generate 0.7 times more return on investment than SinoMedia Holding. However, RCS MediaGroup SpA is 1.43 times less risky than SinoMedia Holding. It trades about 0.03 of its potential returns per unit of risk. SinoMedia Holding Limited is currently generating about 0.0 per unit of risk. If you would invest  90.00  in RCS MediaGroup SpA on March 29, 2025 and sell it today you would earn a total of  3.00  from holding RCS MediaGroup SpA or generate 3.33% return on investment over 90 days.

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

RCS MediaGroup SpA  vs.  SinoMedia Holding Limited

RCS MediaGroup SpA

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RCS MediaGroup SpA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, RCS MediaGroup is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SinoMedia Holding

Risk-Adjusted Performance

Insignificant

Over the last 90 days SinoMedia Holding Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SinoMedia Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with RCS MediaGroup and SinoMedia Holding

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

The idea behind RCS MediaGroup SpA and SinoMedia 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..