Correlation Between Buhler Industries and Hydrofarm Holdings

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

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

Diversification Opportunities for Buhler Industries and Hydrofarm Holdings

0.0

Correlation Coefficient

Buhler Industries  Hydrofarm Holdings

Pay attention - limited upside

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

Pair Corralation between Buhler Industries and Hydrofarm Holdings

If you would invest  51.00  in Hydrofarm Holdings Group on September 20, 2024 and sell it today you would earn a total of  11.00  from holding Hydrofarm Holdings Group or generate 21.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Buhler Industries  vs.  Hydrofarm Holdings Group

Buhler Industries

Risk-Adjusted Performance

0 of 100

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.

Hydrofarm Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hydrofarm Holdings Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Hydrofarm Holdings is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Buhler Industries and Hydrofarm Holdings

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

The idea behind Buhler Industries and Hydrofarm Holdings Group 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.