Correlation Between Buhler Industries and AGCO

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

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

Diversification Opportunities for Buhler Industries and AGCO

0.0

Correlation Coefficient

Buhler Industries  AGCO

Pay attention - limited upside

The 3 months correlation between Buhler and AGCO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Buhler Industries and AGCO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGCO and Buhler Industries 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 Buhler Industries are associated (or correlated) with AGCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGCO has no effect on the direction of Buhler Industries i.e., Buhler Industries and AGCO go up and down completely randomly.

Pair Corralation between Buhler Industries and AGCO

Assuming the 90 days horizon Buhler Industries is expected to generate 0.6 times more return on investment than AGCO. However, Buhler Industries is 1.66 times less risky than AGCO. It trades about 0.04 of its potential returns per unit of risk. AGCO Corporation is currently generating about -0.02 per unit of risk. If you would invest  150.00  in Buhler Industries on December 5, 2024 and sell it today you would earn a total of  38.00  from holding Buhler Industries or generate 25.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.0%
Values	Daily Returns

Buhler Industries  vs.  AGCO Corp.

Buhler Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Buhler Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Buhler Industries is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

AGCO

Risk-Adjusted Performance

Very Weak

Over the last 90 days AGCO Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Buhler Industries and AGCO

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

The idea behind Buhler Industries and AGCO Corporation 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.