Correlation Between United Internet and Computer

Can any of the company-specific risk be diversified away by investing in both United Internet and Computer 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 Computer 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 Computer And Technologies, you can compare the effects of market volatilities on United Internet and Computer 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 Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and Computer.

Diversification Opportunities for United Internet and Computer

0.86

Correlation Coefficient

United Internet  Computer

Very poor diversification

The 3 months correlation between United and Computer is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and Computer And Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer And Technologies 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 Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer And Technologies has no effect on the direction of United Internet i.e., United Internet and Computer go up and down completely randomly.

Pair Corralation between United Internet and Computer

Assuming the 90 days trading horizon United Internet AG is expected to under-perform the Computer. In addition to that, United Internet is 1.13 times more volatile than Computer And Technologies. It trades about -0.19 of its total potential returns per unit of risk. Computer And Technologies is currently generating about -0.14 per unit of volatility. If you would invest  21.00  in Computer And Technologies on September 23, 2024 and sell it today you would lose (3.00) from holding Computer And Technologies or give up 14.29% of portfolio value over 90 days.

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

United Internet AG  vs.  Computer And Technologies

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. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Computer And Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Computer And Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with United Internet and Computer

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

The idea behind United Internet AG and Computer And Technologies 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.