Correlation Between Evolution and Bufab Holding
Can any of the company-specific risk be diversified away by investing in both Evolution 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 Evolution and Bufab Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolution AB and Bufab Holding AB, you can compare the effects of market volatilities on Evolution 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 Evolution with a short position of Bufab Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution and Bufab Holding.
Diversification Opportunities for Evolution and Bufab Holding
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Evolution and Bufab is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Evolution 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 Evolution 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 Evolution 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 Evolution i.e., Evolution and Bufab Holding go up and down completely randomly.
Pair Corralation between Evolution and Bufab Holding
Assuming the 90 days trading horizon Evolution AB is expected to under-perform the Bufab Holding. But the stock apears to be less risky and, when comparing its historical volatility, Evolution AB is 1.11 times less risky than Bufab Holding. The stock trades about -0.05 of its potential returns per unit of risk. The Bufab Holding AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 38,075 in Bufab Holding AB on September 24, 2024 and sell it today you would earn a total of 5,405 from holding Bufab Holding AB or generate 14.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolution AB vs. Bufab Holding AB
Performance |
| Timeline |
| Evolution AB |
| Bufab Holding AB |
Evolution and Bufab Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolution and Bufab Holding
The main advantage of trading using opposite Evolution and Bufab Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution 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.| Evolution vs. XMReality AB | Evolution vs. Mavshack publ AB | Evolution vs. Serstech AB | Evolution vs. Mekonomen AB |
| Bufab Holding vs. Samhllsbyggnadsbolaget i Norden | Bufab Holding vs. Sinch AB | Bufab Holding vs. Evolution AB | Bufab Holding vs. NIBE Industrier 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |