Correlation Between Burckhardt Compression and Bucher Industries

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

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

Diversification Opportunities for Burckhardt Compression and Bucher Industries

-0.51

Correlation Coefficient

Burckhardt Compression  Bucher Industries

Excellent diversification

The 3 months correlation between Burckhardt and Bucher is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Burckhardt Compression and Bucher Industries AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bucher Industries and Burckhardt Compression 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 Burckhardt Compression 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 Burckhardt Compression i.e., Burckhardt Compression and Bucher Industries go up and down completely randomly.

Pair Corralation between Burckhardt Compression and Bucher Industries

Assuming the 90 days trading horizon Burckhardt Compression is expected to generate 1.16 times more return on investment than Bucher Industries. However, Burckhardt Compression is 1.16 times more volatile than Bucher Industries AG. It trades about 0.16 of its potential returns per unit of risk. Bucher Industries AG is currently generating about -0.01 per unit of risk. If you would invest  57,000  in Burckhardt Compression on September 5, 2024 and sell it today you would earn a total of  8,200  from holding Burckhardt Compression or generate 14.39% return on investment over 90 days.

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

Burckhardt Compression  vs.  Bucher Industries AG

Burckhardt Compression

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Burckhardt Compression are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Burckhardt Compression showed solid returns over the last few months and may actually be approaching a breakup point.

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 Burckhardt Compression and Bucher Industries

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

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.