Correlation Between Belimo Holding and Bucher Industries
Can any of the company-specific risk be diversified away by investing in both Belimo Holding and Bucher Industries 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 Belimo Holding and Bucher Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Belimo Holding and Bucher Industries AG, you can compare the effects of market volatilities on Belimo Holding and Bucher Industries 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 Belimo Holding with a short position of Bucher Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Belimo Holding and Bucher Industries.
Diversification Opportunities for Belimo Holding and Bucher Industries
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Belimo and Bucher is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Belimo Holding and Bucher Industries AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bucher Industries and Belimo Holding 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 Belimo Holding are associated (or correlated) with Bucher Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bucher Industries has no effect on the direction of Belimo Holding i.e., Belimo Holding and Bucher Industries go up and down completely randomly.
Pair Corralation between Belimo Holding and Bucher Industries
Assuming the 90 days trading horizon Belimo Holding is expected to generate 0.8 times more return on investment than Bucher Industries. However, Belimo Holding is 1.26 times less risky than Bucher Industries. It trades about 0.07 of its potential returns per unit of risk. Bucher Industries AG is currently generating about -0.17 per unit of risk. If you would invest 57,250 in Belimo Holding on August 25, 2024 and sell it today you would earn a total of 800.00 from holding Belimo Holding or generate 1.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Belimo Holding vs. Bucher Industries AG
Performance |
| Timeline |
| Belimo Holding |
| Bucher Industries |
Belimo Holding and Bucher Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Belimo Holding and Bucher Industries
The main advantage of trading using opposite Belimo Holding and Bucher Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Belimo Holding position performs unexpectedly, Bucher Industries 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 Bucher Industries will offset losses from the drop in Bucher Industries' long position.| Belimo Holding vs. Swiss Re AG | Belimo Holding vs. Zurich Insurance Group | Belimo Holding vs. Swiss Life Holding | Belimo Holding vs. Novartis AG |
| Bucher Industries vs. Emmi AG | Bucher Industries vs. EMS CHEMIE HOLDING AG | Bucher Industries vs. Barry Callebaut AG | Bucher Industries vs. Sulzer AG |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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