Correlation Between Rocket Internet and Sociedad Química

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

Diversification Opportunities for Rocket Internet and Sociedad Química

0.37

Correlation Coefficient

Rocket Internet  Sociedad Química

Weak diversification

The 3 months correlation between Rocket and Sociedad is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Internet SE and Sociedad Qumica y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sociedad Qumica y 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 Sociedad Química. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sociedad Qumica y has no effect on the direction of Rocket Internet i.e., Rocket Internet and Sociedad Química go up and down completely randomly.

Pair Corralation between Rocket Internet and Sociedad Química

Assuming the 90 days trading horizon Rocket Internet is expected to generate 1.67 times less return on investment than Sociedad Química. In addition to that, Rocket Internet is 1.04 times more volatile than Sociedad Qumica y. It trades about 0.06 of its total potential returns per unit of risk. Sociedad Qumica y is currently generating about 0.11 per unit of volatility. If you would invest  3,560  in Sociedad Qumica y on December 23, 2024 and sell it today you would earn a total of  500.00  from holding Sociedad Qumica y or generate 14.04% return on investment over 90 days.

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

Rocket Internet SE  vs.  Sociedad Qumica y

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 4 (%) 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.

Sociedad Qumica y

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sociedad Qumica y are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sociedad Química reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rocket Internet and Sociedad Química

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

The idea behind Rocket Internet SE and Sociedad Qumica y 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 CEOs Directory module to screen CEOs from public companies around the world.