Correlation Between Bucher Industries and SFS Group

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

Diversification Opportunities for Bucher Industries and SFS Group

-0.38

Correlation Coefficient

Bucher Industries  SFS Group

Very good diversification

The 3 months correlation between Bucher and SFS is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bucher Industries AG and SFS Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFS Group AG 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 SFS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFS Group AG has no effect on the direction of Bucher Industries i.e., Bucher Industries and SFS Group go up and down completely randomly.

Pair Corralation between Bucher Industries and SFS Group

Assuming the 90 days trading horizon Bucher Industries AG is expected to generate 1.04 times more return on investment than SFS Group. However, Bucher Industries is 1.04 times more volatile than SFS Group AG. It trades about 0.17 of its potential returns per unit of risk. SFS Group AG is currently generating about -0.1 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bucher Industries AG  vs.  SFS Group AG

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.

SFS Group AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days SFS Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Bucher Industries and SFS Group

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

The idea behind Bucher Industries AG and SFS Group AG 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.