Correlation Between Alimak Hek and Bufab Holding

Can any of the company-specific risk be diversified away by investing in both Alimak Hek and Bufab Holding 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 Alimak Hek and Bufab Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alimak Hek Group and Bufab Holding AB, you can compare the effects of market volatilities on Alimak Hek and Bufab Holding 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 Alimak Hek with a short position of Bufab Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alimak Hek and Bufab Holding.

Diversification Opportunities for Alimak Hek and Bufab Holding

0.49

Correlation Coefficient

Alimak Hek  Bufab Holding

Very weak diversification

The 3 months correlation between Alimak and Bufab is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Alimak Hek Group and Bufab Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bufab Holding AB and Alimak Hek 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 Alimak Hek Group are associated (or correlated) with Bufab Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bufab Holding AB has no effect on the direction of Alimak Hek i.e., Alimak Hek and Bufab Holding go up and down completely randomly.

Pair Corralation between Alimak Hek and Bufab Holding

Assuming the 90 days trading horizon Alimak Hek Group is expected to generate 1.19 times more return on investment than Bufab Holding. However, Alimak Hek is 1.19 times more volatile than Bufab Holding AB. It trades about 0.46 of its potential returns per unit of risk. Bufab Holding AB is currently generating about -0.07 per unit of risk. If you would invest  11,620  in Alimak Hek Group on December 2, 2024 and sell it today you would earn a total of  2,900  from holding Alimak Hek Group or generate 24.96% return on investment over 90 days.

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

Alimak Hek Group  vs.  Bufab Holding AB

Alimak Hek Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alimak Hek Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alimak Hek unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bufab Holding AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bufab Holding AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bufab Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Alimak Hek and Bufab Holding

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

The idea behind Alimak Hek Group and Bufab Holding 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.