Correlation Between Carlo Gavazzi and Bucher Industries

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

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

Diversification Opportunities for Carlo Gavazzi and Bucher Industries

0.86

Correlation Coefficient

Carlo Gavazzi  Bucher Industries

Very poor diversification

The 3 months correlation between Carlo and Bucher is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Carlo Gavazzi Holding and Bucher Industries AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bucher Industries and Carlo Gavazzi 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 Carlo Gavazzi Holding 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 Carlo Gavazzi i.e., Carlo Gavazzi and Bucher Industries go up and down completely randomly.

Pair Corralation between Carlo Gavazzi and Bucher Industries

Assuming the 90 days trading horizon Carlo Gavazzi Holding is expected to under-perform the Bucher Industries. In addition to that, Carlo Gavazzi is 2.44 times more volatile than Bucher Industries AG. It trades about -0.08 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	Strong
Accuracy	96.97%
Values	Daily Returns

Carlo Gavazzi Holding  vs.  Bucher Industries AG

Carlo Gavazzi Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlo Gavazzi Holding 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.

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 Carlo Gavazzi and Bucher Industries

The main advantage of trading using opposite Carlo Gavazzi and Bucher Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlo Gavazzi 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 Carlo Gavazzi Holding 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.