Correlation Between Bufab Holding and FM Mattsson
Can any of the company-specific risk be diversified away by investing in both Bufab Holding and FM Mattsson 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 FM Mattsson 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 FM Mattsson Mora, you can compare the effects of market volatilities on Bufab Holding and FM Mattsson 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 FM Mattsson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bufab Holding and FM Mattsson.
Diversification Opportunities for Bufab Holding and FM Mattsson
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bufab and FMM-B is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bufab Holding AB and FM Mattsson Mora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FM Mattsson Mora 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 FM Mattsson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FM Mattsson Mora has no effect on the direction of Bufab Holding i.e., Bufab Holding and FM Mattsson go up and down completely randomly.
Pair Corralation between Bufab Holding and FM Mattsson
Assuming the 90 days trading horizon Bufab Holding AB is expected to generate 1.08 times more return on investment than FM Mattsson. However, Bufab Holding is 1.08 times more volatile than FM Mattsson Mora. It trades about 0.07 of its potential returns per unit of risk. FM Mattsson Mora is currently generating about 0.0 per unit of risk. If you would invest 23,051 in Bufab Holding AB on August 26, 2024 and sell it today you would earn a total of 18,369 from holding Bufab Holding AB or generate 79.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bufab Holding AB vs. FM Mattsson Mora
Performance |
| Timeline |
| Bufab Holding AB |
| FM Mattsson Mora |
Bufab Holding and FM Mattsson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bufab Holding and FM Mattsson
The main advantage of trading using opposite Bufab Holding and FM Mattsson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bufab Holding position performs unexpectedly, FM Mattsson 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 FM Mattsson will offset losses from the drop in FM Mattsson'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 |
| FM Mattsson vs. Nordic Waterproofing Holding | FM Mattsson vs. Bufab Holding AB | FM Mattsson vs. Garo AB | FM Mattsson vs. Inwido 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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