Correlation Between Ryanair Holdings and Rocket Internet

Can any of the company-specific risk be diversified away by investing in both Ryanair Holdings and Rocket Internet 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 Ryanair Holdings and Rocket Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ryanair Holdings plc and Rocket Internet SE, you can compare the effects of market volatilities on Ryanair Holdings and Rocket Internet 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 Ryanair Holdings with a short position of Rocket Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryanair Holdings and Rocket Internet.

Diversification Opportunities for Ryanair Holdings and Rocket Internet

0.37

Correlation Coefficient

Ryanair Holdings  Rocket Internet

Weak diversification

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

Pair Corralation between Ryanair Holdings and Rocket Internet

Assuming the 90 days trading horizon Ryanair Holdings plc is expected to under-perform the Rocket Internet. But the stock apears to be less risky and, when comparing its historical volatility, Ryanair Holdings plc is 1.72 times less risky than Rocket Internet. The stock trades about -0.15 of its potential returns per unit of risk. The Rocket Internet SE is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,450  in Rocket Internet SE on October 11, 2024 and sell it today you would earn a total of  20.00  from holding Rocket Internet SE or generate 1.38% return on investment over 90 days.

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

Ryanair Holdings plc  vs.  Rocket Internet SE

Ryanair Holdings plc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Ryanair Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Rocket Internet SE

Risk-Adjusted Performance

2 of 100

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.

Pair Trading with Ryanair Holdings and Rocket Internet

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

The idea behind Ryanair Holdings plc and Rocket Internet SE 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 Global Correlations module to find global opportunities by holding instruments from different markets.