Correlation Between Bufab Holding and Concentric

Can any of the company-specific risk be diversified away by investing in both Bufab Holding and Concentric 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 Concentric 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 Concentric AB, you can compare the effects of market volatilities on Bufab Holding and Concentric 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 Concentric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bufab Holding and Concentric.

Diversification Opportunities for Bufab Holding and Concentric

-0.43

Correlation Coefficient

Bufab Holding  Concentric

Very good diversification

The 3 months correlation between Bufab and Concentric is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bufab Holding AB and Concentric AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concentric 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 Concentric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concentric AB has no effect on the direction of Bufab Holding i.e., Bufab Holding and Concentric go up and down completely randomly.

Pair Corralation between Bufab Holding and Concentric

Assuming the 90 days trading horizon Bufab Holding AB is expected to under-perform the Concentric. In addition to that, Bufab Holding is 1.85 times more volatile than Concentric AB. It trades about -0.02 of its total potential returns per unit of risk. Concentric AB is currently generating about 0.03 per unit of volatility. If you would invest  22,650  in Concentric AB on September 3, 2024 and sell it today you would earn a total of  350.00  from holding Concentric AB or generate 1.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	75.38%
Values	Daily Returns

Bufab Holding AB  vs.  Concentric AB

Bufab Holding AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bufab Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bufab Holding is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Concentric AB

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Concentric AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Concentric is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bufab Holding and Concentric

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

The idea behind Bufab Holding AB and Concentric AB 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.