Correlation Between UmweltBank and Kurita Water

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

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

Diversification Opportunities for UmweltBank and Kurita Water

0.89

Correlation Coefficient

UmweltBank  Kurita Water

Very poor diversification

The 3 months correlation between UmweltBank and Kurita is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding UmweltBank AG and Kurita Water Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kurita Water Industries and UmweltBank 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 UmweltBank AG are associated (or correlated) with Kurita Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kurita Water Industries has no effect on the direction of UmweltBank i.e., UmweltBank and Kurita Water go up and down completely randomly.

Pair Corralation between UmweltBank and Kurita Water

Assuming the 90 days trading horizon UmweltBank AG is expected to under-perform the Kurita Water. But the stock apears to be less risky and, when comparing its historical volatility, UmweltBank AG is 1.3 times less risky than Kurita Water. The stock trades about -0.16 of its potential returns per unit of risk. The Kurita Water Industries is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,366  in Kurita Water Industries on December 23, 2024 and sell it today you would lose (272.00) from holding Kurita Water Industries or give up 8.08% of portfolio value over 90 days.

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

UmweltBank AG  vs.  Kurita Water Industries

UmweltBank AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days UmweltBank AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Kurita Water Industries

Risk-Adjusted Performance

Very Weak

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

Pair Trading with UmweltBank and Kurita Water

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

The idea behind UmweltBank AG and Kurita Water Industries 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.