Correlation Between Elma Electronic and Bucher Industries

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

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

Diversification Opportunities for Elma Electronic and Bucher Industries

-0.56

Correlation Coefficient

Elma Electronic  Bucher Industries

Excellent diversification

The 3 months correlation between Elma and Bucher is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Elma Electronic AG and Bucher Industries AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bucher Industries and Elma Electronic 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 Elma Electronic AG 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 Elma Electronic i.e., Elma Electronic and Bucher Industries go up and down completely randomly.

Pair Corralation between Elma Electronic and Bucher Industries

Assuming the 90 days trading horizon Elma Electronic AG is expected to generate 0.42 times more return on investment than Bucher Industries. However, Elma Electronic AG is 2.4 times less risky than Bucher Industries. It trades about 0.41 of its potential returns per unit of risk. Bucher Industries AG is currently generating about -0.2 per unit of risk. If you would invest  104,000  in Elma Electronic AG on September 24, 2024 and sell it today you would earn a total of  1,000.00  from holding Elma Electronic AG or generate 0.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	27.27%
Values	Daily Returns

Elma Electronic AG  vs.  Bucher Industries AG

Elma Electronic AG

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Elma Electronic AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Elma Electronic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Elma Electronic and Bucher Industries

The main advantage of trading using opposite Elma Electronic and Bucher Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elma Electronic 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 Elma Electronic AG 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.