Correlation Between Banque Cantonale and Bucher Industries

Can any of the company-specific risk be diversified away by investing in both Banque Cantonale and Bucher Industries 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 Banque Cantonale and Bucher Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Banque Cantonale and Bucher Industries AG, you can compare the effects of market volatilities on Banque Cantonale and Bucher Industries 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 Banque Cantonale with a short position of Bucher Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banque Cantonale and Bucher Industries.

Diversification Opportunities for Banque Cantonale and Bucher Industries

0.33

Correlation Coefficient

Banque Cantonale  Bucher Industries

Weak diversification

The 3 months correlation between Banque and Bucher is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Banque Cantonale and Bucher Industries AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bucher Industries and Banque Cantonale 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 Banque Cantonale are associated (or correlated) with Bucher Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bucher Industries has no effect on the direction of Banque Cantonale i.e., Banque Cantonale and Bucher Industries go up and down completely randomly.

Pair Corralation between Banque Cantonale and Bucher Industries

Assuming the 90 days trading horizon Banque Cantonale is expected to under-perform the Bucher Industries. In addition to that, Banque Cantonale is 1.28 times more volatile than Bucher Industries AG. It trades about -0.09 of its total potential returns per unit of risk. Bucher Industries AG is currently generating about -0.06 per unit of volatility. If you would invest  35,100  in Bucher Industries AG on September 16, 2024 and sell it today you would lose (1,850) from holding Bucher Industries AG or give up 5.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Banque Cantonale  vs.  Bucher Industries AG

Banque Cantonale

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banque Cantonale has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Bucher Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bucher Industries AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Bucher Industries is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Banque Cantonale and Bucher Industries

The main advantage of trading using opposite Banque Cantonale and Bucher Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banque Cantonale position performs unexpectedly, Bucher Industries 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 Bucher Industries will offset losses from the drop in Bucher Industries' long position.

The idea behind Banque Cantonale and Bucher Industries AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.