Correlation Between United Internet and European Metals

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

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

Diversification Opportunities for United Internet and European Metals

0.3

Correlation Coefficient

United Internet  European Metals

Weak diversification

The 3 months correlation between United and European is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings and United 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 United Internet AG are associated (or correlated) with European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of United Internet i.e., United Internet and European Metals go up and down completely randomly.

Pair Corralation between United Internet and European Metals

Assuming the 90 days trading horizon United Internet is expected to generate 1.17 times less return on investment than European Metals. But when comparing it to its historical volatility, United Internet AG is 2.62 times less risky than European Metals. It trades about 0.17 of its potential returns per unit of risk. European Metals Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  725.00  in European Metals Holdings on December 25, 2024 and sell it today you would earn a total of  138.00  from holding European Metals Holdings or generate 19.03% return on investment over 90 days.

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

United Internet AG  vs.  European Metals Holdings

United Internet AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Internet AG are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, United Internet unveiled solid returns over the last few months and may actually be approaching a breakup point.

European Metals Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in European Metals Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, European Metals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Internet and European Metals

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

The idea behind United Internet AG and European Metals Holdings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.