Correlation Between Buhler Industries and CEA Industries

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

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

Diversification Opportunities for Buhler Industries and CEA Industries

0.0

Correlation Coefficient

Buhler Industries  CEA Industries

Pay attention - limited upside

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

Pair Corralation between Buhler Industries and CEA Industries

If you would invest  770.00  in CEA Industries on December 28, 2024 and sell it today you would earn a total of  50.00  from holding CEA Industries or generate 6.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Buhler Industries  vs.  CEA Industries

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

CEA Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CEA Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, CEA Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Buhler Industries and CEA Industries

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

The idea behind Buhler Industries and CEA Industries 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.