Correlation Between Rocket Internet and Gruppo Mutuionline

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

Diversification Opportunities for Rocket Internet and Gruppo Mutuionline

0.33

Correlation Coefficient

Rocket Internet  Gruppo Mutuionline

Weak diversification

The 3 months correlation between Rocket and Gruppo is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Internet SE and Gruppo Mutuionline SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gruppo Mutuionline SpA 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 Gruppo Mutuionline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gruppo Mutuionline SpA has no effect on the direction of Rocket Internet i.e., Rocket Internet and Gruppo Mutuionline go up and down completely randomly.

Pair Corralation between Rocket Internet and Gruppo Mutuionline

Assuming the 90 days trading horizon Rocket Internet SE is expected to under-perform the Gruppo Mutuionline. In addition to that, Rocket Internet is 1.14 times more volatile than Gruppo Mutuionline SpA. It trades about -0.11 of its total potential returns per unit of risk. Gruppo Mutuionline SpA is currently generating about -0.02 per unit of volatility. If you would invest  3,595  in Gruppo Mutuionline SpA on October 26, 2024 and sell it today you would lose (25.00) from holding Gruppo Mutuionline SpA or give up 0.7% of portfolio value over 90 days.

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

Rocket Internet SE  vs.  Gruppo Mutuionline SpA

Rocket Internet SE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rocket Internet SE are ranked lower than 4 (%) 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 current stock price disarray, may contribute to short-term losses for the investors.

Gruppo Mutuionline SpA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gruppo Mutuionline SpA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Gruppo Mutuionline may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Rocket Internet and Gruppo Mutuionline

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

The idea behind Rocket Internet SE and Gruppo Mutuionline SpA 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.