Correlation Between Rocket Internet and EMCOR

Can any of the company-specific risk be diversified away by investing in both Rocket Internet and EMCOR 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 EMCOR 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 EMCOR Group, you can compare the effects of market volatilities on Rocket Internet and EMCOR 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 EMCOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Internet and EMCOR.

Diversification Opportunities for Rocket Internet and EMCOR

-0.76

Correlation Coefficient

Rocket Internet  EMCOR

Pay attention - limited upside

The 3 months correlation between Rocket and EMCOR is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Internet SE and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group 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 EMCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCOR Group has no effect on the direction of Rocket Internet i.e., Rocket Internet and EMCOR go up and down completely randomly.

Pair Corralation between Rocket Internet and EMCOR

Assuming the 90 days trading horizon Rocket Internet SE is expected to generate 0.7 times more return on investment than EMCOR. However, Rocket Internet SE is 1.43 times less risky than EMCOR. It trades about 0.08 of its potential returns per unit of risk. EMCOR Group is currently generating about -0.08 per unit of risk. If you would invest  1,490  in Rocket Internet SE on December 21, 2024 and sell it today you would earn a total of  140.00  from holding Rocket Internet SE or generate 9.4% return on investment over 90 days.

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

Rocket Internet SE  vs.  EMCOR Group

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 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Rocket Internet may actually be approaching a critical reversion point that can send shares even higher in April 2025.

EMCOR Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days EMCOR Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Rocket Internet and EMCOR

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

The idea behind Rocket Internet SE and EMCOR 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.