Correlation Between Umicore SA and Realord Group

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

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

Diversification Opportunities for Umicore SA and Realord Group

-0.52

Correlation Coefficient

Umicore SA  Realord Group

Excellent diversification

The 3 months correlation between Umicore and Realord is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Umicore SA and Realord Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realord Group Holdings and Umicore 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 Umicore SA are associated (or correlated) with Realord Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realord Group Holdings has no effect on the direction of Umicore SA i.e., Umicore SA and Realord Group go up and down completely randomly.

Pair Corralation between Umicore SA and Realord Group

Assuming the 90 days trading horizon Umicore SA is expected to under-perform the Realord Group. But the stock apears to be less risky and, when comparing its historical volatility, Umicore SA is 1.06 times less risky than Realord Group. The stock trades about -0.2 of its potential returns per unit of risk. The Realord Group Holdings is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  88.00  in Realord Group Holdings on September 24, 2024 and sell it today you would lose (2.00) from holding Realord Group Holdings or give up 2.27% of portfolio value over 90 days.

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

Umicore SA  vs.  Realord Group Holdings

Umicore SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Umicore SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward-looking indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Realord Group Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Realord Group Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Realord Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Umicore SA and Realord Group

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

The idea behind Umicore SA and Realord Group Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.