Correlation Between Investment and United Internet

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

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

Diversification Opportunities for Investment and United Internet

0.08

Correlation Coefficient

Investment  United Internet

Significant diversification

The 3 months correlation between Investment and United is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding The Investment and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG and Investment 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 The Investment are associated (or correlated) with United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of Investment i.e., Investment and United Internet go up and down completely randomly.

Pair Corralation between Investment and United Internet

Assuming the 90 days trading horizon The Investment is expected to under-perform the United Internet. But the stock apears to be less risky and, when comparing its historical volatility, The Investment is 2.77 times less risky than United Internet. The stock trades about -0.33 of its potential returns per unit of risk. The United Internet AG is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,501  in United Internet AG on October 23, 2024 and sell it today you would earn a total of  46.00  from holding United Internet AG or generate 3.06% return on investment over 90 days.

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

The Investment  vs.  United Internet AG

Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Investment is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

United Internet AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Internet AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Investment and United Internet

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

The idea behind The Investment and United Internet AG 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..