Correlation Between Sofina Socit and UCB SA
Can any of the company-specific risk be diversified away by investing in both Sofina Socit 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 Sofina Socit and UCB SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sofina Socit Anonyme and UCB SA, you can compare the effects of market volatilities on Sofina Socit 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 Sofina Socit with a short position of UCB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sofina Socit and UCB SA.
Diversification Opportunities for Sofina Socit and UCB SA
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sofina and UCB is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and UCB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UCB SA and Sofina Socit 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 Sofina Socit Anonyme 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 Sofina Socit i.e., Sofina Socit and UCB SA go up and down completely randomly.
Pair Corralation between Sofina Socit and UCB SA
Assuming the 90 days trading horizon Sofina Socit is expected to generate 10.44 times less return on investment than UCB SA. In addition to that, Sofina Socit is 1.12 times more volatile than UCB SA. It trades about 0.01 of its total potential returns per unit of risk. UCB SA is currently generating about 0.13 per unit of volatility. If you would invest 7,323 in UCB SA on September 4, 2024 and sell it today you would earn a total of 11,272 from holding UCB SA or generate 153.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sofina Socit Anonyme vs. UCB SA
Performance |
| Timeline |
| Sofina Socit Anonyme |
| UCB SA |
Sofina Socit and UCB SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sofina Socit and UCB SA
The main advantage of trading using opposite Sofina Socit and UCB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sofina Socit 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.| Sofina Socit vs. EVS Broadcast Equipment | Sofina Socit vs. Ion Beam Applications | Sofina Socit vs. Immolease Trust NV | Sofina Socit vs. Onward Medical NV |
| UCB SA vs. Groep Brussel Lambert | UCB SA vs. Ackermans Van Haaren | UCB SA vs. Tessenderlo | UCB SA vs. Sofina Socit Anonyme |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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