Correlation Between Bufab Holding and AQ Group

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

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

Diversification Opportunities for Bufab Holding and AQ Group

0.45

Correlation Coefficient

Bufab Holding  AQ Group

Very weak diversification

The 3 months correlation between Bufab and AQ Group is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bufab Holding AB and AQ Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AQ Group AB and Bufab 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 Bufab Holding AB are associated (or correlated) with AQ Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AQ Group AB has no effect on the direction of Bufab Holding i.e., Bufab Holding and AQ Group go up and down completely randomly.

Pair Corralation between Bufab Holding and AQ Group

Assuming the 90 days trading horizon Bufab Holding AB is expected to under-perform the AQ Group. But the stock apears to be less risky and, when comparing its historical volatility, Bufab Holding AB is 1.4 times less risky than AQ Group. The stock trades about -0.05 of its potential returns per unit of risk. The AQ Group AB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  14,000  in AQ Group AB on December 30, 2024 and sell it today you would earn a total of  2,606  from holding AQ Group AB or generate 18.61% return on investment over 90 days.

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

Bufab Holding AB  vs.  AQ Group AB

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.

AQ Group AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AQ Group AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AQ Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bufab Holding and AQ Group

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

The idea behind Bufab Holding AB and AQ Group 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.