Correlation Between CeoTronics and Umicore SA

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

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

Diversification Opportunities for CeoTronics and Umicore SA

-0.33

Correlation Coefficient

CeoTronics  Umicore SA

Very good diversification

The 3 months correlation between CeoTronics and Umicore is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding CeoTronics AG and Umicore SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Umicore SA and CeoTronics 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 CeoTronics AG 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 CeoTronics i.e., CeoTronics and Umicore SA go up and down completely randomly.

Pair Corralation between CeoTronics and Umicore SA

Assuming the 90 days trading horizon CeoTronics AG is expected to generate 0.87 times more return on investment than Umicore SA. However, CeoTronics AG is 1.14 times less risky than Umicore SA. It trades about 0.36 of its potential returns per unit of risk. Umicore SA is currently generating about -0.14 per unit of risk. If you would invest  615.00  in CeoTronics AG on December 4, 2024 and sell it today you would earn a total of  125.00  from holding CeoTronics AG or generate 20.33% return on investment over 90 days.

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

CeoTronics AG  vs.  Umicore SA

CeoTronics AG

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CeoTronics AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking signals, CeoTronics 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. Despite fragile performance in the last few months, the Stock's forward-looking indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CeoTronics and Umicore SA

The main advantage of trading using opposite CeoTronics and Umicore SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CeoTronics 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 CeoTronics AG 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.