Correlation Between Intel and Rocket Internet

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

By analyzing existing cross correlation between Intel and Rocket Internet SE, you can compare the effects of market volatilities on Intel 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 Intel with a short position of Rocket Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Rocket Internet.

Diversification Opportunities for Intel and Rocket Internet

-0.58

Correlation Coefficient

Intel  Rocket Internet

Excellent diversification

The 3 months correlation between Intel and Rocket is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Intel 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 Intel 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 Intel 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 Intel i.e., Intel and Rocket Internet go up and down completely randomly.

Pair Corralation between Intel and Rocket Internet

Assuming the 90 days trading horizon Intel is expected to generate 5.43 times less return on investment than Rocket Internet. But when comparing it to its historical volatility, Intel is 1.22 times less risky than Rocket Internet. It trades about 0.04 of its potential returns per unit of risk. Rocket Internet SE is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,450  in Rocket Internet SE on October 8, 2024 and sell it today you would earn a total of  80.00  from holding Rocket Internet SE or generate 5.52% return on investment over 90 days.

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

Intel  vs.  Rocket Internet SE

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Intel is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Rocket Internet SE

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rocket Internet SE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Intel and Rocket Internet

The main advantage of trading using opposite Intel and Rocket Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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 Intel 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.