Correlation Between Armada Hflr and Buhler Industries

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

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

Diversification Opportunities for Armada Hflr and Buhler Industries

-0.29

Correlation Coefficient

Armada Hflr  Buhler Industries

Very good diversification

The 3 months correlation between Armada and Buhler is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Buhler Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buhler Industries and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Buhler Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buhler Industries has no effect on the direction of Armada Hflr i.e., Armada Hflr and Buhler Industries go up and down completely randomly.

Pair Corralation between Armada Hflr and Buhler Industries

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Buhler Industries. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.72 times less risky than Buhler Industries. The stock trades about -0.07 of its potential returns per unit of risk. The Buhler Industries is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  240.00  in Buhler Industries on September 13, 2024 and sell it today you would earn a total of  49.00  from holding Buhler Industries or generate 20.42% return on investment over 90 days.

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

Armada Hflr Pr  vs.  Buhler Industries

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Buhler Industries

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Buhler Industries are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Buhler Industries displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and Buhler Industries

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

The idea behind Armada Hflr Pr and Buhler Industries 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.