Correlation Between Rocket Internet and MT Bank

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

Diversification Opportunities for Rocket Internet and MT Bank

-0.68

Correlation Coefficient

Rocket Internet  MT Bank

Excellent diversification

The 3 months correlation between Rocket and MTZ is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Internet SE and MT Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank Corp 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 MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank Corp has no effect on the direction of Rocket Internet i.e., Rocket Internet and MT Bank go up and down completely randomly.

Pair Corralation between Rocket Internet and MT Bank

Assuming the 90 days trading horizon Rocket Internet SE is expected to generate 1.63 times more return on investment than MT Bank. However, Rocket Internet is 1.63 times more volatile than MT Bank Corp. It trades about 0.07 of its potential returns per unit of risk. MT Bank Corp is currently generating about -0.11 per unit of risk. If you would invest  1,500  in Rocket Internet SE on December 20, 2024 and sell it today you would earn a total of  130.00  from holding Rocket Internet SE or generate 8.67% 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.  MT Bank Corp

Rocket Internet SE

Risk-Adjusted Performance

Insignificant

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.

MT Bank Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days MT Bank Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Rocket Internet and MT Bank

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

The idea behind Rocket Internet SE and MT Bank Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.