Correlation Between Bucher Industries and Metall Zug
Can any of the company-specific risk be diversified away by investing in both Bucher Industries and Metall Zug 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 Bucher Industries and Metall Zug into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bucher Industries AG and Metall Zug AG, you can compare the effects of market volatilities on Bucher Industries and Metall Zug 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 Bucher Industries with a short position of Metall Zug. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bucher Industries and Metall Zug.
Diversification Opportunities for Bucher Industries and Metall Zug
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bucher and Metall is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bucher Industries AG and Metall Zug AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metall Zug AG and Bucher Industries 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 Bucher Industries AG are associated (or correlated) with Metall Zug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metall Zug AG has no effect on the direction of Bucher Industries i.e., Bucher Industries and Metall Zug go up and down completely randomly.
Pair Corralation between Bucher Industries and Metall Zug
Assuming the 90 days trading horizon Bucher Industries AG is expected to generate 0.59 times more return on investment than Metall Zug. However, Bucher Industries AG is 1.69 times less risky than Metall Zug. It trades about 0.4 of its potential returns per unit of risk. Metall Zug AG is currently generating about -0.16 per unit of risk. If you would invest 32,850 in Bucher Industries AG on November 3, 2024 and sell it today you would earn a total of 3,950 from holding Bucher Industries AG or generate 12.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bucher Industries AG vs. Metall Zug AG
Performance |
| Timeline |
| Bucher Industries |
| Metall Zug AG |
Bucher Industries and Metall Zug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bucher Industries and Metall Zug
The main advantage of trading using opposite Bucher Industries and Metall Zug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bucher Industries position performs unexpectedly, Metall Zug 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 Metall Zug will offset losses from the drop in Metall Zug's long position.| Bucher Industries vs. Emmi AG | Bucher Industries vs. EMS CHEMIE HOLDING AG | Bucher Industries vs. Barry Callebaut AG | Bucher Industries vs. Sulzer AG |
| Metall Zug vs. Bucher Industries AG | Metall Zug vs. Burckhardt Compression | Metall Zug vs. Also Holding AG | Metall Zug vs. Emmi 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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