Correlation Between Buhler Industries and East Side

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Can any of the company-specific risk be diversified away by investing in both Buhler Industries and East Side 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 Buhler Industries and East Side into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buhler Industries and East Side Games, you can compare the effects of market volatilities on Buhler Industries and East Side 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 Buhler Industries with a short position of East Side. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buhler Industries and East Side.

Diversification Opportunities for Buhler Industries and East Side

-0.82
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Buhler and East is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Buhler Industries and East Side Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Side Games and Buhler 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 Buhler Industries are associated (or correlated) with East Side. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Side Games has no effect on the direction of Buhler Industries i.e., Buhler Industries and East Side go up and down completely randomly.

Pair Corralation between Buhler Industries and East Side

Assuming the 90 days trading horizon Buhler Industries is expected to generate 1.34 times less return on investment than East Side. But when comparing it to its historical volatility, Buhler Industries is 2.02 times less risky than East Side. It trades about 0.05 of its potential returns per unit of risk. East Side Games is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  52.00  in East Side Games on September 30, 2024 and sell it today you would earn a total of  4.00  from holding East Side Games or generate 7.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Buhler Industries  vs.  East Side Games

 Performance 
       Timeline  
Buhler Industries 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Buhler Industries are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Buhler Industries displayed solid returns over the last few months and may actually be approaching a breakup point.
East Side Games 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days East Side Games has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Buhler Industries and East Side Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Buhler Industries and East Side

The main advantage of trading using opposite Buhler Industries and East Side positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buhler Industries position performs unexpectedly, East Side 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 East Side will offset losses from the drop in East Side's long position.
The idea behind Buhler Industries and East Side Games 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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