Correlation Between Bachem Holding and Hubersuhner

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

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

Diversification Opportunities for Bachem Holding and Hubersuhner

0.16

Correlation Coefficient

Bachem Holding  Hubersuhner

Average diversification

The 3 months correlation between Bachem and Hubersuhner is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bachem Holding AG and Hubersuhner AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubersuhner AG and Bachem Holding 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 Bachem Holding AG are associated (or correlated) with Hubersuhner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubersuhner AG has no effect on the direction of Bachem Holding i.e., Bachem Holding and Hubersuhner go up and down completely randomly.

Pair Corralation between Bachem Holding and Hubersuhner

Assuming the 90 days trading horizon Bachem Holding AG is expected to under-perform the Hubersuhner. In addition to that, Bachem Holding is 1.26 times more volatile than Hubersuhner AG. It trades about -0.06 of its total potential returns per unit of risk. Hubersuhner AG is currently generating about 0.03 per unit of volatility. If you would invest  7,420  in Hubersuhner AG on December 30, 2024 and sell it today you would earn a total of  120.00  from holding Hubersuhner AG or generate 1.62% return on investment over 90 days.

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

Bachem Holding AG  vs.  Hubersuhner AG

Bachem Holding AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bachem Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Hubersuhner AG

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hubersuhner AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Hubersuhner 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 Bachem Holding and Hubersuhner

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

The idea behind Bachem Holding AG and Hubersuhner 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.