Correlation Between Rocket Internet and S A P
Can any of the company-specific risk be diversified away by investing in both Rocket Internet and S A P 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 S A P 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 SAP SE, you can compare the effects of market volatilities on Rocket Internet and S A P 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 S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Internet and S A P.
Diversification Opportunities for Rocket Internet and S A P
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rocket and SAP is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Internet SE and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE 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 S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of Rocket Internet i.e., Rocket Internet and S A P go up and down completely randomly.
Pair Corralation between Rocket Internet and S A P
Assuming the 90 days trading horizon Rocket Internet SE is expected to under-perform the S A P. In addition to that, Rocket Internet is 2.13 times more volatile than SAP SE. It trades about -0.01 of its total potential returns per unit of risk. SAP SE is currently generating about 0.11 per unit of volatility. If you would invest 24,150 in SAP SE on October 13, 2024 and sell it today you would earn a total of 435.00 from holding SAP SE or generate 1.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rocket Internet SE vs. SAP SE
Performance |
| Timeline |
| Rocket Internet SE |
| SAP SE |
Rocket Internet and S A P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocket Internet and S A P
The main advantage of trading using opposite Rocket Internet and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Internet position performs unexpectedly, S A P 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 S A P will offset losses from the drop in S A P's long position.| Rocket Internet vs. Salesforce | Rocket Internet vs. Superior Plus Corp | Rocket Internet vs. NMI Holdings | Rocket Internet vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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