Correlation Between SFS Group and Bucher Industries

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

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

Diversification Opportunities for SFS Group and Bucher Industries

-0.38

Correlation Coefficient

SFS Group  Bucher Industries

Very good diversification

The 3 months correlation between SFS and Bucher is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding SFS Group 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 SFS Group 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 SFS Group 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 SFS Group i.e., SFS Group and Bucher Industries go up and down completely randomly.

Pair Corralation between SFS Group and Bucher Industries

Assuming the 90 days trading horizon SFS Group AG is expected to under-perform the Bucher Industries. But the stock apears to be less risky and, when comparing its historical volatility, SFS Group AG is 1.04 times less risky than Bucher Industries. The stock trades about -0.1 of its potential returns per unit of risk. The Bucher Industries AG is currently generating about 0.17 of returns per unit of risk over similar time horizon. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SFS Group AG  vs.  Bucher Industries AG

SFS Group AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days SFS Group 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 SFS Group and Bucher Industries

The main advantage of trading using opposite SFS Group and Bucher Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFS Group 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 SFS Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.