Correlation Between Identiv and Rocket Internet

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

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

Diversification Opportunities for Identiv and Rocket Internet

-0.32

Correlation Coefficient

Identiv  Rocket Internet

Very good diversification

The 3 months correlation between Identiv and Rocket is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Identiv 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 Identiv 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 Identiv 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 Identiv i.e., Identiv and Rocket Internet go up and down completely randomly.

Pair Corralation between Identiv and Rocket Internet

Assuming the 90 days trading horizon Identiv is expected to generate 11.08 times less return on investment than Rocket Internet. In addition to that, Identiv is 1.54 times more volatile than Rocket Internet SE. It trades about 0.01 of its total potential returns per unit of risk. Rocket Internet SE is currently generating about 0.1 per unit of volatility. If you would invest  1,450  in Rocket Internet SE on December 2, 2024 and sell it today you would earn a total of  190.00  from holding Rocket Internet SE or generate 13.1% return on investment over 90 days.

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

Identiv  vs.  Rocket Internet SE

Identiv

Risk-Adjusted Performance

Weak

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

Rocket Internet SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rocket Internet SE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Rocket Internet displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Identiv and Rocket Internet

The main advantage of trading using opposite Identiv and Rocket Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Identiv 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 Identiv 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.