Correlation Between Komax Holding and Bucher Industries

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

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

Diversification Opportunities for Komax Holding and Bucher Industries

0.14

Correlation Coefficient

Komax Holding  Bucher Industries

Average diversification

The 3 months correlation between Komax and Bucher is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Komax Holding AG and Bucher Industries AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bucher Industries and Komax 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 Komax Holding AG are associated (or correlated) with Bucher Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bucher Industries has no effect on the direction of Komax Holding i.e., Komax Holding and Bucher Industries go up and down completely randomly.

Pair Corralation between Komax Holding and Bucher Industries

Assuming the 90 days trading horizon Komax Holding AG is expected to under-perform the Bucher Industries. In addition to that, Komax Holding is 2.62 times more volatile than Bucher Industries AG. It trades about -0.03 of its total potential returns per unit of risk. Bucher Industries AG is currently generating about 0.17 per unit of volatility. 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 Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Komax Holding AG  vs.  Bucher Industries AG

Komax Holding AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Komax Holding 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.

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.

Pair Trading with Komax Holding and Bucher Industries

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

The idea behind Komax Holding AG and Bucher Industries 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.