Correlation Between Datagroup and United Internet

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

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

Diversification Opportunities for Datagroup and United Internet

-0.47

Correlation Coefficient

Datagroup  United Internet

Very good diversification

The 3 months correlation between Datagroup and United is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Datagroup SE 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 Datagroup 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 Datagroup SE 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 Datagroup i.e., Datagroup and United Internet go up and down completely randomly.

Pair Corralation between Datagroup and United Internet

Assuming the 90 days trading horizon Datagroup SE is expected to under-perform the United Internet. But the stock apears to be less risky and, when comparing its historical volatility, Datagroup SE is 1.07 times less risky than United Internet. The stock trades about -0.02 of its potential returns per unit of risk. The United Internet AG is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,947  in United Internet AG on September 26, 2024 and sell it today you would lose (442.00) from holding United Internet AG or give up 22.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.2%
Values	Daily Returns

Datagroup SE  vs.  United Internet AG

Datagroup SE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Datagroup SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Datagroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Datagroup and United Internet

The main advantage of trading using opposite Datagroup and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datagroup 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 Datagroup SE 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.