Correlation Between NV Bekaert and UCB SA

Can any of the company-specific risk be diversified away by investing in both NV Bekaert 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 NV Bekaert and UCB SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NV Bekaert SA and UCB SA, you can compare the effects of market volatilities on NV Bekaert 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 NV Bekaert with a short position of UCB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NV Bekaert and UCB SA.

Diversification Opportunities for NV Bekaert and UCB SA

-0.7

Correlation Coefficient

NV Bekaert  UCB SA

Excellent diversification

The 3 months correlation between BEKB and UCB is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding NV Bekaert SA and UCB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UCB SA and NV Bekaert 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 NV Bekaert 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 NV Bekaert i.e., NV Bekaert and UCB SA go up and down completely randomly.

Pair Corralation between NV Bekaert and UCB SA

Assuming the 90 days trading horizon NV Bekaert is expected to generate 82.88 times less return on investment than UCB SA. But when comparing it to its historical volatility, NV Bekaert SA is 1.13 times less risky than UCB SA. It trades about 0.0 of its potential returns per unit of risk. UCB SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7,209  in UCB SA on September 18, 2024 and sell it today you would earn a total of  11,341  from holding UCB SA or generate 157.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

NV Bekaert SA  vs.  UCB SA

NV Bekaert SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NV Bekaert SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

UCB SA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UCB SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, UCB SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NV Bekaert and UCB SA

The main advantage of trading using opposite NV Bekaert and UCB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NV Bekaert 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.

The idea behind NV Bekaert SA and UCB 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.