Correlation Between RTL Group and Beasley Broadcast

Can any of the company-specific risk be diversified away by investing in both RTL Group and Beasley Broadcast 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 RTL Group and Beasley Broadcast into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RTL Group SA and Beasley Broadcast Group, you can compare the effects of market volatilities on RTL Group and Beasley Broadcast 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 RTL Group with a short position of Beasley Broadcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of RTL Group and Beasley Broadcast.

Diversification Opportunities for RTL Group and Beasley Broadcast

-0.47

Correlation Coefficient

RTL Group  Beasley Broadcast

Very good diversification

The 3 months correlation between RTL and Beasley is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding RTL Group SA and Beasley Broadcast Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beasley Broadcast and RTL Group 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 RTL Group SA are associated (or correlated) with Beasley Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beasley Broadcast has no effect on the direction of RTL Group i.e., RTL Group and Beasley Broadcast go up and down completely randomly.

Pair Corralation between RTL Group and Beasley Broadcast

Assuming the 90 days horizon RTL Group SA is expected to generate 0.43 times more return on investment than Beasley Broadcast. However, RTL Group SA is 2.34 times less risky than Beasley Broadcast. It trades about 0.21 of its potential returns per unit of risk. Beasley Broadcast Group is currently generating about -0.02 per unit of risk. If you would invest  4,013  in RTL Group SA on February 4, 2024 and sell it today you would earn a total of  275.00  from holding RTL Group SA or generate 6.85% return on investment over 90 days.

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

RTL Group SA  vs.  Beasley Broadcast Group

RTL Group SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RTL Group SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, RTL Group may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Beasley Broadcast

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beasley Broadcast Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with RTL Group and Beasley Broadcast

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

The idea behind RTL Group SA and Beasley Broadcast Group 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.