Correlation Between Tradegate and UNITED URBAN

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

By analyzing existing cross correlation between Tradegate AG Wertpapierhandelsbank and UNITED URBAN INV, you can compare the effects of market volatilities on Tradegate and UNITED URBAN 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 Tradegate with a short position of UNITED URBAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tradegate and UNITED URBAN.

Diversification Opportunities for Tradegate and UNITED URBAN

0.52

Correlation Coefficient

Tradegate  UNITED URBAN

Very weak diversification

The 3 months correlation between Tradegate and UNITED is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Tradegate AG Wertpapierhandels and UNITED URBAN INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED URBAN INV and Tradegate 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 Tradegate AG Wertpapierhandelsbank are associated (or correlated) with UNITED URBAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED URBAN INV has no effect on the direction of Tradegate i.e., Tradegate and UNITED URBAN go up and down completely randomly.

Pair Corralation between Tradegate and UNITED URBAN

Assuming the 90 days horizon Tradegate AG Wertpapierhandelsbank is expected to under-perform the UNITED URBAN. In addition to that, Tradegate is 1.2 times more volatile than UNITED URBAN INV. It trades about -0.04 of its total potential returns per unit of risk. UNITED URBAN INV is currently generating about -0.03 per unit of volatility. If you would invest  94,500  in UNITED URBAN INV on September 12, 2024 and sell it today you would lose (11,500) from holding UNITED URBAN INV or give up 12.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.72%
Values	Daily Returns

Tradegate AG Wertpapierhandels  vs.  UNITED URBAN INV

Tradegate AG Wertpap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tradegate AG Wertpapierhandelsbank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tradegate is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

UNITED URBAN INV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITED URBAN INV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, UNITED URBAN is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Tradegate and UNITED URBAN

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

The idea behind Tradegate AG Wertpapierhandelsbank and UNITED URBAN INV 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.