Correlation Between Burckhardt Compression and Comet Holding

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

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

Diversification Opportunities for Burckhardt Compression and Comet Holding

-0.81

Correlation Coefficient

Burckhardt Compression  Comet Holding

Pay attention - limited upside

The 3 months correlation between Burckhardt and Comet is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Burckhardt Compression and Comet Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comet Holding AG 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 Comet Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comet Holding AG has no effect on the direction of Burckhardt Compression i.e., Burckhardt Compression and Comet Holding go up and down completely randomly.

Pair Corralation between Burckhardt Compression and Comet Holding

Assuming the 90 days trading horizon Burckhardt Compression is expected to generate 0.68 times more return on investment than Comet Holding. However, Burckhardt Compression is 1.47 times less risky than Comet Holding. It trades about 0.16 of its potential returns per unit of risk. Comet Holding AG is currently generating about -0.09 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	Significant
Accuracy	98.46%
Values	Daily Returns

Burckhardt Compression  vs.  Comet Holding 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.

Comet Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Comet 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.

Pair Trading with Burckhardt Compression and Comet Holding

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

The idea behind Burckhardt Compression and Comet Holding 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.