Correlation Between European Metals and United Internet
Can any of the company-specific risk be diversified away by investing in both European Metals 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 European Metals and United Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Metals Holdings and United Internet AG, you can compare the effects of market volatilities on European Metals 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 European Metals with a short position of United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and United Internet.
Diversification Opportunities for European Metals and United Internet
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between European and United is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings 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 European Metals 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 European Metals Holdings 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 European Metals i.e., European Metals and United Internet go up and down completely randomly.
Pair Corralation between European Metals and United Internet
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the United Internet. In addition to that, European Metals is 1.63 times more volatile than United Internet AG. It trades about -0.11 of its total potential returns per unit of risk. United Internet AG is currently generating about 0.04 per unit of volatility. If you would invest 1,283 in United Internet AG on August 28, 2024 and sell it today you would earn a total of 286.00 from holding United Internet AG or generate 22.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
European Metals Holdings vs. United Internet AG
Performance |
| Timeline |
| European Metals Holdings |
| United Internet AG |
European Metals and United Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and United Internet
The main advantage of trading using opposite European Metals and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals 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.| European Metals vs. Givaudan SA | European Metals vs. Antofagasta PLC | European Metals vs. Centamin PLC | European Metals vs. Atalaya Mining |
| United Internet vs. Silvercorp Metals | United Internet vs. Gaming Realms plc | United Internet vs. Naked Wines plc | United Internet vs. Neometals |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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