Correlation Between SIDETRADE and Rocket Internet

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Can any of the company-specific risk be diversified away by investing in both SIDETRADE and Rocket Internet 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 SIDETRADE and Rocket Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIDETRADE EO 1 and Rocket Internet SE, you can compare the effects of market volatilities on SIDETRADE and Rocket Internet 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 SIDETRADE with a short position of Rocket Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIDETRADE and Rocket Internet.

Diversification Opportunities for SIDETRADE and Rocket Internet

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between SIDETRADE and Rocket is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding SIDETRADE EO 1 and Rocket Internet SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocket Internet SE and SIDETRADE 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 SIDETRADE EO 1 are associated (or correlated) with Rocket Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocket Internet SE has no effect on the direction of SIDETRADE i.e., SIDETRADE and Rocket Internet go up and down completely randomly.

Pair Corralation between SIDETRADE and Rocket Internet

Assuming the 90 days horizon SIDETRADE EO 1 is expected to generate 1.84 times more return on investment than Rocket Internet. However, SIDETRADE is 1.84 times more volatile than Rocket Internet SE. It trades about 0.1 of its potential returns per unit of risk. Rocket Internet SE is currently generating about 0.01 per unit of risk. If you would invest  19,200  in SIDETRADE EO 1 on September 12, 2024 and sell it today you would earn a total of  2,500  from holding SIDETRADE EO 1 or generate 13.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

SIDETRADE EO 1  vs.  Rocket Internet SE

 Performance 
       Timeline  
SIDETRADE EO 1 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in SIDETRADE EO 1 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SIDETRADE reported solid returns over the last few months and may actually be approaching a breakup point.
Rocket Internet SE 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Rocket Internet SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Rocket Internet is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

SIDETRADE and Rocket Internet Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SIDETRADE and Rocket Internet

The main advantage of trading using opposite SIDETRADE and Rocket Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIDETRADE position performs unexpectedly, Rocket Internet 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 Rocket Internet will offset losses from the drop in Rocket Internet's long position.
The idea behind SIDETRADE EO 1 and Rocket Internet 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.
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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