Correlation Between United Internet and TRADEGATE

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

Diversification Opportunities for United Internet and TRADEGATE

-0.61

Correlation Coefficient

United Internet  TRADEGATE

Excellent diversification

The 3 months correlation between United and TRADEGATE is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and TRADEGATE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRADEGATE 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 TRADEGATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRADEGATE has no effect on the direction of United Internet i.e., United Internet and TRADEGATE go up and down completely randomly.

Pair Corralation between United Internet and TRADEGATE

Assuming the 90 days trading horizon United Internet AG is expected to under-perform the TRADEGATE. In addition to that, United Internet is 5.45 times more volatile than TRADEGATE. It trades about -0.08 of its total potential returns per unit of risk. TRADEGATE is currently generating about -0.12 per unit of volatility. If you would invest  9,050  in TRADEGATE on September 23, 2024 and sell it today you would lose (50.00) from holding TRADEGATE or give up 0.55% of portfolio value over 90 days.

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

United Internet AG  vs.  TRADEGATE

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.

TRADEGATE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with United Internet and TRADEGATE

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

The idea behind United Internet AG and TRADEGATE 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.