Correlation Between Bucher Industries and Schweiter Technologies

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

Diversification Opportunities for Bucher Industries and Schweiter Technologies

0.41

Correlation Coefficient

Bucher Industries  Schweiter Technologies

Very weak diversification

The 3 months correlation between Bucher and Schweiter is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bucher Industries AG and Schweiter Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweiter Technologies 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 Schweiter Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweiter Technologies has no effect on the direction of Bucher Industries i.e., Bucher Industries and Schweiter Technologies go up and down completely randomly.

Pair Corralation between Bucher Industries and Schweiter Technologies

Assuming the 90 days trading horizon Bucher Industries AG is expected to generate 0.68 times more return on investment than Schweiter Technologies. However, Bucher Industries AG is 1.47 times less risky than Schweiter Technologies. It trades about 0.17 of its potential returns per unit of risk. Schweiter Technologies AG is currently generating about 0.0 per unit of risk. If you would invest  32,600  in Bucher Industries AG on December 29, 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.  Schweiter Technologies 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.

Schweiter Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Schweiter Technologies AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Schweiter Technologies 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 Schweiter Technologies

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

The idea behind Bucher Industries AG and Schweiter Technologies 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.