Correlation Between Schweiter Technologies and Bucher Industries

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

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

Diversification Opportunities for Schweiter Technologies and Bucher Industries

-0.27

Correlation Coefficient

Schweiter Technologies  Bucher Industries

Very good diversification

The 3 months correlation between Schweiter and Bucher is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Schweiter Technologies 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 Schweiter Technologies 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 Schweiter Technologies 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 Schweiter Technologies i.e., Schweiter Technologies and Bucher Industries go up and down completely randomly.

Pair Corralation between Schweiter Technologies and Bucher Industries

Assuming the 90 days trading horizon Schweiter Technologies AG is expected to generate 2.13 times more return on investment than Bucher Industries. However, Schweiter Technologies is 2.13 times more volatile than Bucher Industries AG. It trades about 0.32 of its potential returns per unit of risk. Bucher Industries AG is currently generating about 0.19 per unit of risk. If you would invest  40,350  in Schweiter Technologies AG on October 23, 2024 and sell it today you would earn a total of  4,200  from holding Schweiter Technologies AG or generate 10.41% return on investment over 90 days.

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

Schweiter Technologies AG  vs.  Bucher Industries AG

Schweiter Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Schweiter Technologies AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Schweiter Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Bucher Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bucher Industries 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.

Pair Trading with Schweiter Technologies and Bucher Industries

The main advantage of trading using opposite Schweiter Technologies and Bucher Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schweiter Technologies 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 Schweiter Technologies 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.