Correlation Between Rocket Internet and BANK HANDLOWY

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

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

Diversification Opportunities for Rocket Internet and BANK HANDLOWY

0.58

Correlation Coefficient

Rocket Internet  BANK HANDLOWY

Very weak diversification

The 3 months correlation between Rocket and BANK is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Internet SE and BANK HANDLOWY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK HANDLOWY and Rocket Internet 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 Rocket Internet SE are associated (or correlated) with BANK HANDLOWY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK HANDLOWY has no effect on the direction of Rocket Internet i.e., Rocket Internet and BANK HANDLOWY go up and down completely randomly.

Pair Corralation between Rocket Internet and BANK HANDLOWY

Assuming the 90 days trading horizon Rocket Internet is expected to generate 1.66 times less return on investment than BANK HANDLOWY. In addition to that, Rocket Internet is 2.02 times more volatile than BANK HANDLOWY. It trades about 0.16 of its total potential returns per unit of risk. BANK HANDLOWY is currently generating about 0.55 per unit of volatility. If you would invest  2,295  in BANK HANDLOWY on December 9, 2024 and sell it today you would earn a total of  300.00  from holding BANK HANDLOWY or generate 13.07% return on investment over 90 days.

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

Rocket Internet SE  vs.  BANK HANDLOWY

Rocket Internet SE

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rocket Internet SE are ranked lower than 6 (%) 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.

BANK HANDLOWY

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in BANK HANDLOWY are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BANK HANDLOWY unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rocket Internet and BANK HANDLOWY

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

The idea behind Rocket Internet SE and BANK HANDLOWY 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.