Correlation Between Bucher Industries and Dorma Kaba

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

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

Diversification Opportunities for Bucher Industries and Dorma Kaba

0.58

Correlation Coefficient

Bucher Industries  Dorma Kaba

Very weak diversification

The 3 months correlation between Bucher and Dorma is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bucher Industries AG and Dorma Kaba Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorma Kaba Holding and Bucher 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 Bucher Industries AG are associated (or correlated) with Dorma Kaba. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dorma Kaba Holding has no effect on the direction of Bucher Industries i.e., Bucher Industries and Dorma Kaba go up and down completely randomly.

Pair Corralation between Bucher Industries and Dorma Kaba

Assuming the 90 days trading horizon Bucher Industries AG is expected to generate 0.81 times more return on investment than Dorma Kaba. However, Bucher Industries AG is 1.24 times less risky than Dorma Kaba. It trades about 0.17 of its potential returns per unit of risk. Dorma Kaba Holding is currently generating about 0.04 per unit of risk. If you would invest  32,600  in Bucher Industries AG on December 30, 2024 and sell it today you would earn a total of  5,050  from holding Bucher Industries AG or generate 15.49% return on investment over 90 days.

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

Bucher Industries AG  vs.  Dorma Kaba Holding

Bucher Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bucher Industries AG are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Bucher Industries showed solid returns over the last few months and may actually be approaching a breakup point.

Dorma Kaba Holding

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dorma Kaba Holding are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Dorma Kaba is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Bucher Industries and Dorma Kaba

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

The idea behind Bucher Industries AG and Dorma Kaba 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.

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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.