Correlation Between Bufab Holding and Lindab International
Can any of the company-specific risk be diversified away by investing in both Bufab Holding and Lindab International 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 Lindab International 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 Lindab International AB, you can compare the effects of market volatilities on Bufab Holding and Lindab International 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 Lindab International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bufab Holding and Lindab International.
Diversification Opportunities for Bufab Holding and Lindab International
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bufab and Lindab is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bufab Holding AB and Lindab International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindab International 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 Lindab International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindab International has no effect on the direction of Bufab Holding i.e., Bufab Holding and Lindab International go up and down completely randomly.
Pair Corralation between Bufab Holding and Lindab International
Assuming the 90 days trading horizon Bufab Holding AB is expected to generate 0.91 times more return on investment than Lindab International. However, Bufab Holding AB is 1.1 times less risky than Lindab International. It trades about 0.22 of its potential returns per unit of risk. Lindab International AB is currently generating about 0.07 per unit of risk. If you would invest 39,000 in Bufab Holding AB on August 29, 2024 and sell it today you would earn a total of 2,860 from holding Bufab Holding AB or generate 7.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bufab Holding AB vs. Lindab International AB
Performance |
| Timeline |
| Bufab Holding AB |
| Lindab International |
Bufab Holding and Lindab International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bufab Holding and Lindab International
The main advantage of trading using opposite Bufab Holding and Lindab International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bufab Holding position performs unexpectedly, Lindab International 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 Lindab International will offset losses from the drop in Lindab International's long position.| Bufab Holding vs. Addtech AB | Bufab Holding vs. Teqnion AB | Bufab Holding vs. Vitec Software Group | Bufab Holding vs. Lagercrantz Group AB |
| Lindab International vs. Addtech AB | Lindab International vs. Teqnion AB | Lindab International vs. Vitec Software Group | Lindab International vs. Lagercrantz 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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