Correlation Between Rocket Internet and PSI Software
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By analyzing existing cross correlation between Rocket Internet SE and PSI Software AG, you can compare the effects of market volatilities on Rocket Internet and PSI Software 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 PSI Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Internet and PSI Software.
Diversification Opportunities for Rocket Internet and PSI Software
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rocket and PSI is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Internet SE and PSI Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSI Software AG 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 PSI Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSI Software AG has no effect on the direction of Rocket Internet i.e., Rocket Internet and PSI Software go up and down completely randomly.
Pair Corralation between Rocket Internet and PSI Software
Assuming the 90 days trading horizon Rocket Internet SE is expected to under-perform the PSI Software. In addition to that, Rocket Internet is 2.12 times more volatile than PSI Software AG. It trades about -0.18 of its total potential returns per unit of risk. PSI Software AG is currently generating about 0.23 per unit of volatility. If you would invest 2,110 in PSI Software AG on October 29, 2024 and sell it today you would earn a total of 70.00 from holding PSI Software AG or generate 3.32% 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. PSI Software AG
Performance |
| Timeline |
| Rocket Internet SE |
| PSI Software AG |
Rocket Internet and PSI Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocket Internet and PSI Software
The main advantage of trading using opposite Rocket Internet and PSI Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Internet position performs unexpectedly, PSI Software 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 PSI Software will offset losses from the drop in PSI Software's long position.The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Rocket Internet as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Rocket Internet's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Rocket Internet's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Rocket Internet SE.
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Check out your portfolio center.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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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