Correlation Between UCB SA and Bolt Biotherapeutics

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

By analyzing existing cross correlation between UCB SA and Bolt Biotherapeutics, you can compare the effects of market volatilities on UCB SA and Bolt Biotherapeutics 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 Bolt Biotherapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of UCB SA and Bolt Biotherapeutics.

Diversification Opportunities for UCB SA and Bolt Biotherapeutics

0.5

Correlation Coefficient

UCB SA  Bolt Biotherapeutics

Very weak diversification

The 3 months correlation between UCB and Bolt is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding UCB SA and Bolt Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolt Biotherapeutics 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 Bolt Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolt Biotherapeutics has no effect on the direction of UCB SA i.e., UCB SA and Bolt Biotherapeutics go up and down completely randomly.

Pair Corralation between UCB SA and Bolt Biotherapeutics

Assuming the 90 days horizon UCB SA is expected to generate 0.7 times more return on investment than Bolt Biotherapeutics. However, UCB SA is 1.44 times less risky than Bolt Biotherapeutics. It trades about -0.23 of its potential returns per unit of risk. Bolt Biotherapeutics is currently generating about -0.16 per unit of risk. If you would invest  19,476  in UCB SA on September 13, 2024 and sell it today you would lose (2,076) from holding UCB SA or give up 10.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

UCB SA  vs.  Bolt Biotherapeutics

UCB SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UCB SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking indicators, UCB SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Bolt Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bolt Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Bolt Biotherapeutics is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with UCB SA and Bolt Biotherapeutics

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

The idea behind UCB SA and Bolt Biotherapeutics 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.