Correlation Between Bucher Industries and Leclanche

Can any of the company-specific risk be diversified away by investing in both Bucher Industries and Leclanche 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 Leclanche 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 Leclanche SA, you can compare the effects of market volatilities on Bucher Industries and Leclanche 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 Leclanche. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bucher Industries and Leclanche.

Diversification Opportunities for Bucher Industries and Leclanche

-0.26

Correlation Coefficient

Bucher Industries  Leclanche

Very good diversification

The 3 months correlation between Bucher and Leclanche is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Bucher Industries AG and Leclanche SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leclanche SA 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 Leclanche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leclanche SA has no effect on the direction of Bucher Industries i.e., Bucher Industries and Leclanche go up and down completely randomly.

Pair Corralation between Bucher Industries and Leclanche

Assuming the 90 days trading horizon Bucher Industries AG is expected to under-perform the Leclanche. But the stock apears to be less risky and, when comparing its historical volatility, Bucher Industries AG is 15.56 times less risky than Leclanche. The stock trades about -0.06 of its potential returns per unit of risk. The Leclanche SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Leclanche SA on September 16, 2024 and sell it today you would earn a total of  2.00  from holding Leclanche SA or generate 11.11% return on investment over 90 days.

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

Bucher Industries AG  vs.  Leclanche SA

Bucher Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bucher Industries AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Bucher Industries is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Leclanche SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Leclanche SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Leclanche showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bucher Industries and Leclanche

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

The idea behind Bucher Industries AG and Leclanche SA 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.