Correlation Between Bufab Holding and Bravida Holding

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

Diversification Opportunities for Bufab Holding and Bravida Holding

0.59

Correlation Coefficient

Bufab Holding  Bravida Holding

Very weak diversification

The 3 months correlation between Bufab and Bravida is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bufab Holding AB and Bravida Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bravida Holding 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 Bravida Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bravida Holding AB has no effect on the direction of Bufab Holding i.e., Bufab Holding and Bravida Holding go up and down completely randomly.

Pair Corralation between Bufab Holding and Bravida Holding

Assuming the 90 days trading horizon Bufab Holding AB is expected to under-perform the Bravida Holding. In addition to that, Bufab Holding is 1.56 times more volatile than Bravida Holding AB. It trades about -0.02 of its total potential returns per unit of risk. Bravida Holding AB is currently generating about -0.02 per unit of volatility. If you would invest  8,040  in Bravida Holding AB on September 3, 2024 and sell it today you would lose (160.00) from holding Bravida Holding AB or give up 1.99% of portfolio value over 90 days.

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

Bufab Holding AB  vs.  Bravida Holding AB

Bufab Holding AB

Risk-Adjusted Performance

0 of 100

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.

Bravida Holding AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bravida Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bravida Holding is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bufab Holding and Bravida Holding

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

The idea behind Bufab Holding AB and Bravida Holding 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.