Correlation Between Umicore SA and Aker Carbon

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

By analyzing existing cross correlation between Umicore SA ADR and Aker Carbon Capture, you can compare the effects of market volatilities on Umicore SA and Aker Carbon 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 Aker Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Umicore SA and Aker Carbon.

Diversification Opportunities for Umicore SA and Aker Carbon

-0.03

Correlation Coefficient

Umicore SA  Aker Carbon

Good diversification

The 3 months correlation between Umicore and Aker is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Umicore SA ADR and Aker Carbon Capture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Carbon Capture 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 ADR are associated (or correlated) with Aker Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Carbon Capture has no effect on the direction of Umicore SA i.e., Umicore SA and Aker Carbon go up and down completely randomly.

Pair Corralation between Umicore SA and Aker Carbon

Assuming the 90 days horizon Umicore SA ADR is expected to generate 0.34 times more return on investment than Aker Carbon. However, Umicore SA ADR is 2.97 times less risky than Aker Carbon. It trades about 0.04 of its potential returns per unit of risk. Aker Carbon Capture is currently generating about -0.02 per unit of risk. 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 Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Umicore SA ADR  vs.  Aker Carbon Capture

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.

Aker Carbon Capture

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aker Carbon Capture has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental 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 Umicore SA and Aker Carbon

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

The idea behind Umicore SA ADR and Aker Carbon Capture 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.