Correlation Between KRISPY KREME and United Internet

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

By analyzing existing cross correlation between KRISPY KREME DL 01 and United Internet AG, you can compare the effects of market volatilities on KRISPY KREME 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 KRISPY KREME with a short position of United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and United Internet.

Diversification Opportunities for KRISPY KREME and United Internet

0.14

Correlation Coefficient

KRISPY KREME  United Internet

Average diversification

The 3 months correlation between KRISPY and United is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding KRISPY KREME DL 01 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 KRISPY KREME 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 KRISPY KREME DL 01 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 KRISPY KREME i.e., KRISPY KREME and United Internet go up and down completely randomly.

Pair Corralation between KRISPY KREME and United Internet

Assuming the 90 days horizon KRISPY KREME DL 01 is expected to generate 1.03 times more return on investment than United Internet. However, KRISPY KREME is 1.03 times more volatile than United Internet AG. It trades about -0.07 of its potential returns per unit of risk. United Internet AG is currently generating about -0.09 per unit of risk. If you would invest  1,086  in KRISPY KREME DL 01 on September 17, 2024 and sell it today you would lose (131.00) from holding KRISPY KREME DL 01 or give up 12.06% of portfolio value over 90 days.

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

KRISPY KREME DL 01  vs.  United Internet AG

KRISPY KREME DL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KRISPY KREME DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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.

Pair Trading with KRISPY KREME and United Internet

The main advantage of trading using opposite KRISPY KREME and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRISPY KREME 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 KRISPY KREME DL 01 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.