Correlation Between NV Bekaert and Umicore SA

Can any of the company-specific risk be diversified away by investing in both NV Bekaert and Umicore 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 Umicore 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 Umicore SA, you can compare the effects of market volatilities on NV Bekaert and Umicore 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 Umicore SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NV Bekaert and Umicore SA.

Diversification Opportunities for NV Bekaert and Umicore SA

-0.55

Correlation Coefficient

NV Bekaert  Umicore SA

Excellent diversification

The 3 months correlation between BEKB and Umicore is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding NV Bekaert SA and Umicore SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Umicore 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 Umicore SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Umicore SA has no effect on the direction of NV Bekaert i.e., NV Bekaert and Umicore SA go up and down completely randomly.

Pair Corralation between NV Bekaert and Umicore SA

Assuming the 90 days trading horizon NV Bekaert SA is expected to generate 0.76 times more return on investment than Umicore SA. However, NV Bekaert SA is 1.32 times less risky than Umicore SA. It trades about 0.07 of its potential returns per unit of risk. Umicore SA is currently generating about -0.06 per unit of risk. If you would invest  3,302  in NV Bekaert SA on December 23, 2024 and sell it today you would earn a total of  292.00  from holding NV Bekaert SA or generate 8.84% return on investment over 90 days.

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

NV Bekaert SA  vs.  Umicore SA

NV Bekaert SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NV Bekaert SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, NV Bekaert may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Umicore SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with NV Bekaert and Umicore SA

The main advantage of trading using opposite NV Bekaert and Umicore SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NV Bekaert position performs unexpectedly, Umicore 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 Umicore SA will offset losses from the drop in Umicore SA's long position.

The idea behind NV Bekaert SA and Umicore 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.