Correlation Between Rocket Internet and FORMPIPE SOFTWARE

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

Diversification Opportunities for Rocket Internet and FORMPIPE SOFTWARE

-0.27

Correlation Coefficient

Rocket Internet  FORMPIPE SOFTWARE

Very good diversification

The 3 months correlation between Rocket and FORMPIPE is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Internet SE and FORMPIPE SOFTWARE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORMPIPE SOFTWARE has no effect on the direction of Rocket Internet i.e., Rocket Internet and FORMPIPE SOFTWARE go up and down completely randomly.

Pair Corralation between Rocket Internet and FORMPIPE SOFTWARE

Assuming the 90 days trading horizon Rocket Internet is expected to generate 22.95 times less return on investment than FORMPIPE SOFTWARE. But when comparing it to its historical volatility, Rocket Internet SE is 2.39 times less risky than FORMPIPE SOFTWARE. It trades about 0.01 of its potential returns per unit of risk. FORMPIPE SOFTWARE AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  195.00  in FORMPIPE SOFTWARE AB on September 12, 2024 and sell it today you would earn a total of  14.00  from holding FORMPIPE SOFTWARE AB or generate 7.18% return on investment over 90 days.

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

Rocket Internet SE  vs.  FORMPIPE SOFTWARE AB

Rocket Internet SE

Risk-Adjusted Performance

0 of 100

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.

FORMPIPE SOFTWARE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FORMPIPE SOFTWARE AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FORMPIPE SOFTWARE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Rocket Internet and FORMPIPE SOFTWARE

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

The idea behind Rocket Internet SE and FORMPIPE SOFTWARE AB 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.