Correlation Between UCB SA and Whats Cooking
Can any of the company-specific risk be diversified away by investing in both UCB SA and Whats Cooking 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 Whats Cooking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UCB SA and Whats Cooking Group, you can compare the effects of market volatilities on UCB SA and Whats Cooking 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 Whats Cooking. Check out your portfolio center. Please also check ongoing floating volatility patterns of UCB SA and Whats Cooking.
Diversification Opportunities for UCB SA and Whats Cooking
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UCB and Whats is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding UCB SA and Whats Cooking Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whats Cooking Group 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 Whats Cooking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whats Cooking Group has no effect on the direction of UCB SA i.e., UCB SA and Whats Cooking go up and down completely randomly.
Pair Corralation between UCB SA and Whats Cooking
Assuming the 90 days trading horizon UCB SA is expected to generate 0.65 times more return on investment than Whats Cooking. However, UCB SA is 1.54 times less risky than Whats Cooking. It trades about 0.13 of its potential returns per unit of risk. Whats Cooking Group is currently generating about 0.04 per unit of risk. If you would invest 8,300 in UCB SA on August 29, 2024 and sell it today you would earn a total of 9,925 from holding UCB SA or generate 119.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.5% |
| Values | Daily Returns |
UCB SA vs. Whats Cooking Group
Performance |
| Timeline |
| UCB SA |
| Whats Cooking Group |
UCB SA and Whats Cooking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UCB SA and Whats Cooking
The main advantage of trading using opposite UCB SA and Whats Cooking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UCB SA position performs unexpectedly, Whats Cooking 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 Whats Cooking will offset losses from the drop in Whats Cooking's long position.The idea behind UCB SA and Whats Cooking Group 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.| Whats Cooking vs. Hyloris Developmentsen Sa | Whats Cooking vs. Biocartis Group NV | Whats Cooking vs. Exmar NV | Whats Cooking vs. Iep Invest |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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