Correlation Between 3U Holding and MBB SE

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Can any of the company-specific risk be diversified away by investing in both 3U Holding and MBB SE 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 3U Holding and MBB SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3U Holding AG and MBB SE, you can compare the effects of market volatilities on 3U Holding and MBB SE 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 3U Holding with a short position of MBB SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3U Holding and MBB SE.

Diversification Opportunities for 3U Holding and MBB SE

-0.64
  Correlation Coefficient

Excellent diversification

The 3 months correlation between UUU and MBB is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding 3U Holding AG and MBB SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBB SE and 3U Holding 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 3U Holding AG are associated (or correlated) with MBB SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBB SE has no effect on the direction of 3U Holding i.e., 3U Holding and MBB SE go up and down completely randomly.

Pair Corralation between 3U Holding and MBB SE

Assuming the 90 days horizon 3U Holding AG is expected to under-perform the MBB SE. In addition to that, 3U Holding is 1.32 times more volatile than MBB SE. It trades about -0.17 of its total potential returns per unit of risk. MBB SE is currently generating about 0.23 per unit of volatility. If you would invest  9,480  in MBB SE on December 29, 2023 and sell it today you would earn a total of  720.00  from holding MBB SE or generate 7.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

3U Holding AG  vs.  MBB SE

 Performance 
       Timeline  
3U Holding AG 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days 3U Holding 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 basic indicators remain nearly stable which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
MBB SE 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in MBB SE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MBB SE may actually be approaching a critical reversion point that can send shares even higher in April 2024.

3U Holding and MBB SE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 3U Holding and MBB SE

The main advantage of trading using opposite 3U Holding and MBB SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3U Holding position performs unexpectedly, MBB SE 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 MBB SE will offset losses from the drop in MBB SE's long position.
The idea behind 3U Holding AG and MBB SE 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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