Correlation Between China Conch and Umicore SA

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

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

Diversification Opportunities for China Conch and Umicore SA

0.28

Correlation Coefficient

China Conch  Umicore SA

Modest diversification

The 3 months correlation between China and Umicore is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding China Conch Venture and Umicore SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Umicore SA ADR and China Conch 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 China Conch Venture 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 ADR has no effect on the direction of China Conch i.e., China Conch and Umicore SA go up and down completely randomly.

Pair Corralation between China Conch and Umicore SA

Assuming the 90 days horizon China Conch is expected to generate 7.19 times less return on investment than Umicore SA. But when comparing it to its historical volatility, China Conch Venture is 20.96 times less risky than Umicore SA. It trades about 0.13 of its potential returns per unit of risk. Umicore SA ADR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  256.00  in Umicore SA ADR on December 29, 2024 and sell it today you would earn a total of  14.00  from holding Umicore SA ADR or generate 5.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

China Conch Venture  vs.  Umicore SA ADR

China Conch Venture

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Conch Venture are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, China Conch is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Umicore SA ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Umicore SA ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Umicore SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with China Conch and Umicore SA

The main advantage of trading using opposite China Conch and Umicore SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Conch 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 China Conch Venture and Umicore SA ADR 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.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.