Correlation Between Tubize Fin and Umicore SA

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

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

Diversification Opportunities for Tubize Fin and Umicore SA

0.08

Correlation Coefficient

Tubize Fin  Umicore SA

Significant diversification

The 3 months correlation between Tubize and Umicore is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Tubize Fin and Umicore SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Umicore SA and Tubize Fin 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 Tubize Fin 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 Tubize Fin i.e., Tubize Fin and Umicore SA go up and down completely randomly.

Pair Corralation between Tubize Fin and Umicore SA

Assuming the 90 days trading horizon Tubize Fin is expected to generate 0.86 times more return on investment than Umicore SA. However, Tubize Fin is 1.16 times less risky than Umicore SA. It trades about 0.14 of its potential returns per unit of risk. Umicore SA is currently generating about -0.08 per unit of risk. If you would invest  10,800  in Tubize Fin on October 7, 2024 and sell it today you would earn a total of  4,200  from holding Tubize Fin or generate 38.89% return on investment over 90 days.

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

Tubize Fin  vs.  Umicore SA

Tubize Fin

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tubize Fin are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Tubize Fin reported solid returns over the last few months and may actually be approaching a breakup point.

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. 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 Tubize Fin and Umicore SA

The main advantage of trading using opposite Tubize Fin and Umicore SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tubize Fin 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 Tubize Fin 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.