Correlation Between Cenergy Holdings and UCB SA
Can any of the company-specific risk be diversified away by investing in both Cenergy Holdings and UCB SA 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 Cenergy Holdings and UCB SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cenergy Holdings SA and UCB SA, you can compare the effects of market volatilities on Cenergy Holdings and UCB SA 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 Cenergy Holdings with a short position of UCB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cenergy Holdings and UCB SA.
Diversification Opportunities for Cenergy Holdings and UCB SA
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cenergy and UCB is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Cenergy Holdings SA and UCB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UCB SA and Cenergy Holdings 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 Cenergy Holdings SA are associated (or correlated) with UCB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UCB SA has no effect on the direction of Cenergy Holdings i.e., Cenergy Holdings and UCB SA go up and down completely randomly.
Pair Corralation between Cenergy Holdings and UCB SA
Assuming the 90 days trading horizon Cenergy Holdings is expected to generate 1.41 times less return on investment than UCB SA. In addition to that, Cenergy Holdings is 1.2 times more volatile than UCB SA. It trades about 0.2 of its total potential returns per unit of risk. UCB SA is currently generating about 0.33 per unit of volatility. If you would invest 16,600 in UCB SA on September 18, 2024 and sell it today you would earn a total of 1,950 from holding UCB SA or generate 11.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cenergy Holdings SA vs. UCB SA
Performance |
| Timeline |
| Cenergy Holdings |
| UCB SA |
Cenergy Holdings and UCB SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cenergy Holdings and UCB SA
The main advantage of trading using opposite Cenergy Holdings and UCB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cenergy Holdings position performs unexpectedly, UCB SA 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 UCB SA will offset losses from the drop in UCB SA's long position.| Cenergy Holdings vs. Ackermans Van Haaren | Cenergy Holdings vs. NV Bekaert SA | Cenergy Holdings vs. Groep Brussel Lambert | Cenergy Holdings vs. Tubize Fin |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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