Correlation Between Bufab Holding and Addtech AB

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Can any of the company-specific risk be diversified away by investing in both Bufab Holding and Addtech AB 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 Bufab Holding and Addtech AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bufab Holding AB and Addtech AB, you can compare the effects of market volatilities on Bufab Holding and Addtech AB 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 Bufab Holding with a short position of Addtech AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bufab Holding and Addtech AB.

Diversification Opportunities for Bufab Holding and Addtech AB

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Bufab and Addtech is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bufab Holding AB and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB and Bufab 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 Bufab Holding AB are associated (or correlated) with Addtech AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addtech AB has no effect on the direction of Bufab Holding i.e., Bufab Holding and Addtech AB go up and down completely randomly.

Pair Corralation between Bufab Holding and Addtech AB

Assuming the 90 days trading horizon Bufab Holding AB is expected to generate 0.91 times more return on investment than Addtech AB. However, Bufab Holding AB is 1.1 times less risky than Addtech AB. It trades about 0.25 of its potential returns per unit of risk. Addtech AB is currently generating about 0.09 per unit of risk. If you would invest  7,355  in Bufab Holding AB on April 23, 2025 and sell it today you would earn a total of  2,148  from holding Bufab Holding AB or generate 29.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Bufab Holding AB  vs.  Addtech AB

 Performance 
       Timeline  
Bufab Holding AB 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Bufab Holding AB are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bufab Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.
Addtech AB 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Addtech AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Addtech AB may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Bufab Holding and Addtech AB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bufab Holding and Addtech AB

The main advantage of trading using opposite Bufab Holding and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bufab Holding position performs unexpectedly, Addtech AB 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 Addtech AB will offset losses from the drop in Addtech AB's long position.
The idea behind Bufab Holding AB and Addtech AB 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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