Correlation Between Umicore Group and Purecycle Technologies

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Can any of the company-specific risk be diversified away by investing in both Umicore Group and Purecycle Technologies 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 Group and Purecycle Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Umicore Group ADR and Purecycle Technologies, you can compare the effects of market volatilities on Umicore Group and Purecycle Technologies 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 Group with a short position of Purecycle Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Umicore Group and Purecycle Technologies.

Diversification Opportunities for Umicore Group and Purecycle Technologies

0.02
  Correlation Coefficient

Significant diversification

The 3 months correlation between Umicore and Purecycle is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Umicore Group ADR and Purecycle Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purecycle Technologies and Umicore Group 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 Group ADR are associated (or correlated) with Purecycle Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purecycle Technologies has no effect on the direction of Umicore Group i.e., Umicore Group and Purecycle Technologies go up and down completely randomly.

Pair Corralation between Umicore Group and Purecycle Technologies

Assuming the 90 days horizon Umicore Group ADR is expected to under-perform the Purecycle Technologies. But the otc stock apears to be less risky and, when comparing its historical volatility, Umicore Group ADR is 1.85 times less risky than Purecycle Technologies. The otc stock trades about -0.11 of its potential returns per unit of risk. The Purecycle Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  884.00  in Purecycle Technologies on July 7, 2022 and sell it today you would earn a total of  41.00  from holding Purecycle Technologies or generate 4.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Umicore Group ADR  vs.  Purecycle Technologies

 Performance (%) 
       Timeline  
Umicore Group ADR 
Umicore Performance
0 of 100
Over the last 90 days Umicore Group ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Umicore Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Umicore Price Channel

Purecycle Technologies 
Purecycle Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Purecycle Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental indicators, Purecycle Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Purecycle Price Channel

Umicore Group and Purecycle Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Umicore Group and Purecycle Technologies

The main advantage of trading using opposite Umicore Group and Purecycle Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Umicore Group position performs unexpectedly, Purecycle Technologies 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 Purecycle Technologies will offset losses from the drop in Purecycle Technologies' long position.
Umicore Group vs. Amazon Inc
The idea behind Umicore Group ADR and Purecycle Technologies 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.
Purecycle Technologies vs. Amazon Inc
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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