Correlation Between Groep Brussel and UCB SA
Can any of the company-specific risk be diversified away by investing in both Groep Brussel 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 Groep Brussel and UCB SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Groep Brussel Lambert and UCB SA, you can compare the effects of market volatilities on Groep Brussel 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 Groep Brussel with a short position of UCB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groep Brussel and UCB SA.
Diversification Opportunities for Groep Brussel and UCB SA
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Groep and UCB is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Groep Brussel Lambert and UCB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UCB SA and Groep Brussel 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 Groep Brussel Lambert 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 Groep Brussel i.e., Groep Brussel and UCB SA go up and down completely randomly.
Pair Corralation between Groep Brussel and UCB SA
Assuming the 90 days trading horizon Groep Brussel Lambert is expected to generate 0.51 times more return on investment than UCB SA. However, Groep Brussel Lambert is 1.96 times less risky than UCB SA. It trades about 0.11 of its potential returns per unit of risk. UCB SA is currently generating about -0.03 per unit of risk. If you would invest 6,615 in Groep Brussel Lambert on November 5, 2024 and sell it today you would earn a total of 105.00 from holding Groep Brussel Lambert or generate 1.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Groep Brussel Lambert vs. UCB SA
Performance |
| Timeline |
| Groep Brussel Lambert |
| UCB SA |
Groep Brussel and UCB SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Groep Brussel and UCB SA
The main advantage of trading using opposite Groep Brussel and UCB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Groep Brussel 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.| Groep Brussel vs. Ackermans Van Haaren | Groep Brussel vs. Sofina Socit Anonyme | Groep Brussel vs. ageas SANV | Groep Brussel vs. Solvay SA |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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