Correlation Between Rocket Internet and Newmont

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

Diversification Opportunities for Rocket Internet and Newmont

-0.36

Correlation Coefficient

Rocket Internet  Newmont

Very good diversification

The 3 months correlation between Rocket and Newmont is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Internet SE and Newmont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont 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 Newmont. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont has no effect on the direction of Rocket Internet i.e., Rocket Internet and Newmont go up and down completely randomly.

Pair Corralation between Rocket Internet and Newmont

Assuming the 90 days trading horizon Rocket Internet SE is expected to generate 0.54 times more return on investment than Newmont. However, Rocket Internet SE is 1.85 times less risky than Newmont. It trades about 0.03 of its potential returns per unit of risk. Newmont is currently generating about -0.16 per unit of risk. If you would invest  1,450  in Rocket Internet SE on October 23, 2024 and sell it today you would earn a total of  30.00  from holding Rocket Internet SE or generate 2.07% 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.  Newmont

Rocket Internet SE

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rocket Internet SE are ranked lower than 2 (%) 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.

Newmont

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Rocket Internet and Newmont

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

The idea behind Rocket Internet SE and Newmont 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.