Correlation Between Bufab Holding and XANO Industri
Can any of the company-specific risk be diversified away by investing in both Bufab Holding and XANO Industri 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 XANO Industri 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 XANO Industri AB, you can compare the effects of market volatilities on Bufab Holding and XANO Industri 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 XANO Industri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bufab Holding and XANO Industri.
Diversification Opportunities for Bufab Holding and XANO Industri
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bufab and XANO is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bufab Holding AB and XANO Industri AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XANO Industri 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 XANO Industri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XANO Industri AB has no effect on the direction of Bufab Holding i.e., Bufab Holding and XANO Industri go up and down completely randomly.
Pair Corralation between Bufab Holding and XANO Industri
Assuming the 90 days trading horizon Bufab Holding AB is expected to generate 0.63 times more return on investment than XANO Industri. However, Bufab Holding AB is 1.6 times less risky than XANO Industri. It trades about 0.39 of its potential returns per unit of risk. XANO Industri AB is currently generating about -0.25 per unit of risk. If you would invest 38,420 in Bufab Holding AB on September 5, 2024 and sell it today you would earn a total of 6,240 from holding Bufab Holding AB or generate 16.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bufab Holding AB vs. XANO Industri AB
Performance |
| Timeline |
| Bufab Holding AB |
| XANO Industri AB |
Bufab Holding and XANO Industri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bufab Holding and XANO Industri
The main advantage of trading using opposite Bufab Holding and XANO Industri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bufab Holding position performs unexpectedly, XANO Industri 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 XANO Industri will offset losses from the drop in XANO Industri'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 |
| XANO Industri vs. Indutrade AB | XANO Industri vs. Addtech AB | XANO Industri vs. Nolato AB | XANO Industri vs. Bufab Holding 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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