Correlation Between Bucher Industries and Burckhardt Compression

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

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

Diversification Opportunities for Bucher Industries and Burckhardt Compression

-0.78

Correlation Coefficient

Bucher Industries  Burckhardt Compression

Pay attention - limited upside

The 3 months correlation between Bucher and Burckhardt is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bucher Industries AG and Burckhardt Compression in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burckhardt Compression and Bucher Industries 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 Bucher Industries AG are associated (or correlated) with Burckhardt Compression. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burckhardt Compression has no effect on the direction of Bucher Industries i.e., Bucher Industries and Burckhardt Compression go up and down completely randomly.

Pair Corralation between Bucher Industries and Burckhardt Compression

Assuming the 90 days trading horizon Bucher Industries AG is expected to under-perform the Burckhardt Compression. But the stock apears to be less risky and, when comparing its historical volatility, Bucher Industries AG is 1.05 times less risky than Burckhardt Compression. The stock trades about -0.03 of its potential returns per unit of risk. The Burckhardt Compression is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  56,906  in Burckhardt Compression on September 14, 2024 and sell it today you would earn a total of  8,294  from holding Burckhardt Compression or generate 14.57% return on investment over 90 days.

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

Bucher Industries AG  vs.  Burckhardt Compression

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.

Burckhardt Compression

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Burckhardt Compression are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Burckhardt Compression may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bucher Industries and Burckhardt Compression

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

The idea behind Bucher Industries AG and Burckhardt Compression 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.