Correlation Between Burckhardt Compression and Feintool International

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

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

Diversification Opportunities for Burckhardt Compression and Feintool International

-0.76

Correlation Coefficient

Burckhardt Compression  Feintool International

Pay attention - limited upside

The 3 months correlation between Burckhardt and Feintool is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Burckhardt Compression and Feintool International Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feintool International 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 Feintool International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feintool International has no effect on the direction of Burckhardt Compression i.e., Burckhardt Compression and Feintool International go up and down completely randomly.

Pair Corralation between Burckhardt Compression and Feintool International

Assuming the 90 days trading horizon Burckhardt Compression is expected to generate 0.73 times more return on investment than Feintool International. However, Burckhardt Compression is 1.37 times less risky than Feintool International. It trades about 0.15 of its potential returns per unit of risk. Feintool International Holding is currently generating about -0.12 per unit of risk. If you would invest  58,400  in Burckhardt Compression on September 14, 2024 and sell it today you would earn a total of  7,900  from holding Burckhardt Compression or generate 13.53% return on investment over 90 days.

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

Burckhardt Compression  vs.  Feintool International Holding

Burckhardt Compression

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Burckhardt Compression are ranked lower than 11 (%) 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.

Feintool International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Feintool International Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Burckhardt Compression and Feintool International

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

The idea behind Burckhardt Compression and Feintool International Holding 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.