Correlation Between UNITED INTERNET and ABB

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

By analyzing existing cross correlation between UNITED INTERNET N and ABB, you can compare the effects of market volatilities on UNITED INTERNET and ABB 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 ABB. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED INTERNET and ABB.

Diversification Opportunities for UNITED INTERNET and ABB

-0.46

Correlation Coefficient

UNITED INTERNET  ABB

Very good diversification

The 3 months correlation between UNITED and ABB is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding UNITED INTERNET N and ABB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABB 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 N are associated (or correlated) with ABB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABB has no effect on the direction of UNITED INTERNET i.e., UNITED INTERNET and ABB go up and down completely randomly.

Pair Corralation between UNITED INTERNET and ABB

Assuming the 90 days trading horizon UNITED INTERNET N is expected to generate 0.94 times more return on investment than ABB. However, UNITED INTERNET N is 1.07 times less risky than ABB. It trades about 0.19 of its potential returns per unit of risk. ABB is currently generating about -0.01 per unit of risk. If you would invest  1,602  in UNITED INTERNET N on February 4, 2025 and sell it today you would earn a total of  480.00  from holding UNITED INTERNET N or generate 29.96% return on investment over 90 days.

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

UNITED INTERNET N  vs.  ABB

UNITED INTERNET N

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UNITED INTERNET N are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, UNITED INTERNET unveiled solid returns over the last few months and may actually be approaching a breakup point.

ABB

Risk-Adjusted Performance

Very Weak

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

Pair Trading with UNITED INTERNET and ABB

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

The idea behind UNITED INTERNET N and ABB 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.