Correlation Between UCB SA and DIeteren Group
Can any of the company-specific risk be diversified away by investing in both UCB SA and DIeteren Group 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 UCB SA and DIeteren Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UCB SA and DIeteren Group SA, you can compare the effects of market volatilities on UCB SA and DIeteren Group 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 UCB SA with a short position of DIeteren Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of UCB SA and DIeteren Group.
Diversification Opportunities for UCB SA and DIeteren Group
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UCB and DIeteren is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding UCB SA and DIeteren Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIeteren Group SA and UCB SA 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 UCB SA are associated (or correlated) with DIeteren Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIeteren Group SA has no effect on the direction of UCB SA i.e., UCB SA and DIeteren Group go up and down completely randomly.
Pair Corralation between UCB SA and DIeteren Group
Assuming the 90 days trading horizon UCB SA is expected to generate 7.25 times less return on investment than DIeteren Group. In addition to that, UCB SA is 1.51 times more volatile than DIeteren Group SA. It trades about 0.01 of its total potential returns per unit of risk. DIeteren Group SA is currently generating about 0.16 per unit of volatility. If you would invest 18,810 in DIeteren Group SA on August 24, 2024 and sell it today you would earn a total of 870.00 from holding DIeteren Group SA or generate 4.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UCB SA vs. DIeteren Group SA
Performance |
| Timeline |
| UCB SA |
| DIeteren Group SA |
UCB SA and DIeteren Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UCB SA and DIeteren Group
The main advantage of trading using opposite UCB SA and DIeteren Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UCB SA position performs unexpectedly, DIeteren Group 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 DIeteren Group will offset losses from the drop in DIeteren Group's long position.The idea behind UCB SA and DIeteren Group SA 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.| DIeteren Group vs. Ackermans Van Haaren | DIeteren Group vs. Sofina Socit Anonyme | DIeteren Group vs. Groep Brussel Lambert | DIeteren Group vs. Barco NV |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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