Correlation Between Bravida Holding and Bufab Holding

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

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

Diversification Opportunities for Bravida Holding and Bufab Holding

0.44

Correlation Coefficient

Bravida Holding  Bufab Holding

Very weak diversification

The 3 months correlation between Bravida and Bufab is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bravida Holding AB and Bufab Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bufab Holding AB and Bravida Holding 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 Bravida Holding AB are associated (or correlated) with Bufab Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bufab Holding AB has no effect on the direction of Bravida Holding i.e., Bravida Holding and Bufab Holding go up and down completely randomly.

Pair Corralation between Bravida Holding and Bufab Holding

Assuming the 90 days trading horizon Bravida Holding AB is expected to generate 0.67 times more return on investment than Bufab Holding. However, Bravida Holding AB is 1.5 times less risky than Bufab Holding. It trades about 0.19 of its potential returns per unit of risk. Bufab Holding AB is currently generating about -0.05 per unit of risk. If you would invest  8,050  in Bravida Holding AB on December 31, 2024 and sell it today you would earn a total of  1,150  from holding Bravida Holding AB or generate 14.29% return on investment over 90 days.

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

Bravida Holding AB  vs.  Bufab Holding AB

Bravida Holding AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bravida Holding AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bravida Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bufab Holding AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bufab Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bufab Holding is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bravida Holding and Bufab Holding

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

The idea behind Bravida Holding AB and Bufab Holding AB 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 CEOs Directory module to screen CEOs from public companies around the world.