Correlation Between Cloetta AB and Bufab Holding
Can any of the company-specific risk be diversified away by investing in both Cloetta AB and Bufab Holding 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 Cloetta AB and Bufab Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cloetta AB and Bufab Holding AB, you can compare the effects of market volatilities on Cloetta AB and Bufab Holding 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 Cloetta AB with a short position of Bufab Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cloetta AB and Bufab Holding.
Diversification Opportunities for Cloetta AB and Bufab Holding
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cloetta and Bufab is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cloetta AB and Bufab Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bufab Holding AB and Cloetta AB 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 Cloetta AB are associated (or correlated) with Bufab Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bufab Holding AB has no effect on the direction of Cloetta AB i.e., Cloetta AB and Bufab Holding go up and down completely randomly.
Pair Corralation between Cloetta AB and Bufab Holding
Assuming the 90 days trading horizon Cloetta AB is expected to generate 1.97 times more return on investment than Bufab Holding. However, Cloetta AB is 1.97 times more volatile than Bufab Holding AB. It trades about 0.19 of its potential returns per unit of risk. Bufab Holding AB is currently generating about 0.21 per unit of risk. If you would invest 2,544 in Cloetta AB on November 3, 2024 and sell it today you would earn a total of 286.00 from holding Cloetta AB or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cloetta AB vs. Bufab Holding AB
Performance |
| Timeline |
| Cloetta AB |
| Bufab Holding AB |
Cloetta AB and Bufab Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cloetta AB and Bufab Holding
The main advantage of trading using opposite Cloetta AB and Bufab Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cloetta AB position performs unexpectedly, Bufab Holding 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 Bufab Holding will offset losses from the drop in Bufab Holding's long position.| Cloetta AB vs. Securitas AB | Cloetta AB vs. Clas Ohlson AB | Cloetta AB vs. Axfood AB | Cloetta AB vs. Byggmax Group AB |
| Bufab Holding vs. Addtech AB | Bufab Holding vs. Indutrade AB | Bufab Holding vs. Troax Group AB | Bufab Holding vs. Beijer Ref 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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