Correlation Between Rakuten and Delivery Hero

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

By analyzing existing cross correlation between Rakuten Inc ADR and Delivery Hero SE, you can compare the effects of market volatilities on Rakuten and Delivery Hero 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 Rakuten with a short position of Delivery Hero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rakuten and Delivery Hero.

Diversification Opportunities for Rakuten and Delivery Hero

-0.48

Correlation Coefficient

Rakuten  Delivery Hero

Very good diversification

The 3 months correlation between Rakuten and Delivery is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Rakuten Inc ADR and Delivery Hero SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delivery Hero SE and Rakuten 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 Rakuten Inc ADR are associated (or correlated) with Delivery Hero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delivery Hero SE has no effect on the direction of Rakuten i.e., Rakuten and Delivery Hero go up and down completely randomly.

Pair Corralation between Rakuten and Delivery Hero

Assuming the 90 days horizon Rakuten Inc ADR is expected to under-perform the Delivery Hero. But the pink sheet apears to be less risky and, when comparing its historical volatility, Rakuten Inc ADR is 1.11 times less risky than Delivery Hero. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Delivery Hero SE is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  304.00  in Delivery Hero SE on September 12, 2024 and sell it today you would earn a total of  68.00  from holding Delivery Hero SE or generate 22.37% return on investment over 90 days.

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

Rakuten Inc ADR  vs.  Delivery Hero SE

Rakuten Inc ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rakuten Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Delivery Hero SE

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delivery Hero SE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical indicators, Delivery Hero showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rakuten and Delivery Hero

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

The idea behind Rakuten Inc ADR and Delivery Hero 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..