Correlation Between Bufab Holding and Cloetta AB
Can any of the company-specific risk be diversified away by investing in both Bufab Holding and Cloetta AB 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 Bufab Holding and Cloetta AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bufab Holding AB and Cloetta AB, you can compare the effects of market volatilities on Bufab Holding and Cloetta AB 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 Bufab Holding with a short position of Cloetta AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bufab Holding and Cloetta AB.
Diversification Opportunities for Bufab Holding and Cloetta AB
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bufab and Cloetta is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bufab Holding AB and Cloetta AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloetta AB and Bufab 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 Bufab Holding AB are associated (or correlated) with Cloetta AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloetta AB has no effect on the direction of Bufab Holding i.e., Bufab Holding and Cloetta AB go up and down completely randomly.
Pair Corralation between Bufab Holding and Cloetta AB
Assuming the 90 days trading horizon Bufab Holding AB is expected to generate 1.25 times more return on investment than Cloetta AB. However, Bufab Holding is 1.25 times more volatile than Cloetta AB. It trades about 0.07 of its potential returns per unit of risk. Cloetta AB is currently generating about -0.08 per unit of risk. If you would invest 43,580 in Bufab Holding AB on October 24, 2024 and sell it today you would earn a total of 640.00 from holding Bufab Holding AB or generate 1.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bufab Holding AB vs. Cloetta AB
Performance |
| Timeline |
| Bufab Holding AB |
| Cloetta AB |
Bufab Holding and Cloetta AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bufab Holding and Cloetta AB
The main advantage of trading using opposite Bufab Holding and Cloetta AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bufab Holding position performs unexpectedly, Cloetta AB 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 Cloetta AB will offset losses from the drop in Cloetta AB's long position.| Bufab Holding vs. Addtech AB | Bufab Holding vs. Indutrade AB | Bufab Holding vs. Troax Group AB | Bufab Holding vs. Beijer Ref AB |
| Cloetta AB vs. Securitas AB | Cloetta AB vs. Clas Ohlson AB | Cloetta AB vs. Axfood AB | Cloetta AB vs. Byggmax Group AB |
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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