Correlation Between UCB SA and Kinepolis Group

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

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

Diversification Opportunities for UCB SA and Kinepolis Group

-0.42

Correlation Coefficient

UCB SA  Kinepolis Group

Very good diversification

The 3 months correlation between UCB and Kinepolis is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding UCB SA and Kinepolis Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinepolis Group NV and UCB 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 UCB SA are associated (or correlated) with Kinepolis Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinepolis Group NV has no effect on the direction of UCB SA i.e., UCB SA and Kinepolis Group go up and down completely randomly.

Pair Corralation between UCB SA and Kinepolis Group

Assuming the 90 days trading horizon UCB SA is expected to generate 1.19 times more return on investment than Kinepolis Group. However, UCB SA is 1.19 times more volatile than Kinepolis Group NV. It trades about 0.1 of its potential returns per unit of risk. Kinepolis Group NV is currently generating about -0.02 per unit of risk. If you would invest  16,295  in UCB SA on September 13, 2024 and sell it today you would earn a total of  1,700  from holding UCB SA or generate 10.43% return on investment over 90 days.

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

UCB SA  vs.  Kinepolis Group NV

UCB SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UCB SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, UCB SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kinepolis Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinepolis Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Kinepolis Group is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with UCB SA and Kinepolis Group

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

The idea behind UCB SA and Kinepolis Group NV 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.