Correlation Between Altagas Cum and Buhler Industries

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

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

Diversification Opportunities for Altagas Cum and Buhler Industries

0.89

Correlation Coefficient

Altagas Cum  Buhler Industries

Very poor diversification

The 3 months correlation between Altagas and Buhler is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Altagas Cum Red and Buhler Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buhler Industries and Altagas Cum 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 Altagas Cum Red 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 Altagas Cum i.e., Altagas Cum and Buhler Industries go up and down completely randomly.

Pair Corralation between Altagas Cum and Buhler Industries

Assuming the 90 days trading horizon Altagas Cum is expected to generate 2.39 times less return on investment than Buhler Industries. But when comparing it to its historical volatility, Altagas Cum Red is 4.3 times less risky than Buhler Industries. It trades about 0.33 of its potential returns per unit of risk. Buhler Industries is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  245.00  in Buhler Industries on October 22, 2024 and sell it today you would earn a total of  94.00  from holding Buhler Industries or generate 38.37% return on investment over 90 days.

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

Altagas Cum Red  vs.  Buhler Industries

Altagas Cum Red

Risk-Adjusted Performance

26 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altagas Cum Red are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Altagas Cum sustained solid returns over the last few months and may actually be approaching a breakup point.

Buhler Industries

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Buhler Industries are ranked lower than 14 (%) 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 Altagas Cum and Buhler Industries

The main advantage of trading using opposite Altagas Cum and Buhler Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altagas Cum 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 Altagas Cum Red 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.