Correlation Between Metall Zug and Bucher Industries
Can any of the company-specific risk be diversified away by investing in both Metall Zug 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 Metall Zug and Bucher Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metall Zug AG and Bucher Industries AG, you can compare the effects of market volatilities on Metall Zug 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 Metall Zug with a short position of Bucher Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metall Zug and Bucher Industries.
Diversification Opportunities for Metall Zug and Bucher Industries
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metall and Bucher is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Metall Zug 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 Metall Zug 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 Metall Zug 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 Metall Zug i.e., Metall Zug and Bucher Industries go up and down completely randomly.
Pair Corralation between Metall Zug and Bucher Industries
Assuming the 90 days trading horizon Metall Zug AG is expected to generate 1.3 times more return on investment than Bucher Industries. However, Metall Zug is 1.3 times more volatile than Bucher Industries AG. It trades about -0.06 of its potential returns per unit of risk. Bucher Industries AG is currently generating about -0.11 per unit of risk. If you would invest 120,500 in Metall Zug AG on September 18, 2024 and sell it today you would lose (7,500) from holding Metall Zug AG or give up 6.22% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Metall Zug AG vs. Bucher Industries AG
Performance |
Timeline |
Metall Zug AG |
Bucher Industries |
Metall Zug and Bucher Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Metall Zug and Bucher Industries
The main advantage of trading using opposite Metall Zug and Bucher Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metall Zug 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.Metall Zug vs. Bucher Industries AG | Metall Zug vs. Burckhardt Compression | Metall Zug vs. Also Holding AG | Metall Zug vs. Emmi AG |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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