Correlation Between Wienerberger Baustoffindustri and Buzzi Unicem

Can any of the company-specific risk be diversified away by investing in both Wienerberger Baustoffindustri and Buzzi Unicem 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 Wienerberger Baustoffindustri and Buzzi Unicem into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wienerberger Baustoffindustrie and Buzzi Unicem SpA, you can compare the effects of market volatilities on Wienerberger Baustoffindustri and Buzzi Unicem 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 Wienerberger Baustoffindustri with a short position of Buzzi Unicem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wienerberger Baustoffindustri and Buzzi Unicem.

Diversification Opportunities for Wienerberger Baustoffindustri and Buzzi Unicem

0.97

Correlation Coefficient

Wienerberger Baustoffindustri  Buzzi Unicem

Almost no diversification

The 3 months correlation between Wienerberger and Buzzi is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Wienerberger Baustoffindustrie and Buzzi Unicem SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buzzi Unicem SpA and Wienerberger Baustoffindustri 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 Wienerberger Baustoffindustrie are associated (or correlated) with Buzzi Unicem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buzzi Unicem SpA has no effect on the direction of Wienerberger Baustoffindustri i.e., Wienerberger Baustoffindustri and Buzzi Unicem go up and down completely randomly.

Pair Corralation between Wienerberger Baustoffindustri and Buzzi Unicem

Assuming the 90 days horizon Wienerberger Baustoffindustri is expected to generate 1.16 times less return on investment than Buzzi Unicem. In addition to that, Wienerberger Baustoffindustri is 1.29 times more volatile than Buzzi Unicem SpA. It trades about 0.11 of its total potential returns per unit of risk. Buzzi Unicem SpA is currently generating about 0.16 per unit of volatility. If you would invest  1,847  in Buzzi Unicem SpA on December 30, 2024 and sell it today you would earn a total of  643.00  from holding Buzzi Unicem SpA or generate 34.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Wienerberger Baustoffindustrie  vs.  Buzzi Unicem SpA

Wienerberger Baustoffindustri

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wienerberger Baustoffindustrie are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Wienerberger Baustoffindustri showed solid returns over the last few months and may actually be approaching a breakup point.

Buzzi Unicem SpA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Buzzi Unicem SpA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Buzzi Unicem showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wienerberger Baustoffindustri and Buzzi Unicem

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

The idea behind Wienerberger Baustoffindustrie and Buzzi Unicem SpA 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.