Correlation Between Bufab Holding and CellaVision

Can any of the company-specific risk be diversified away by investing in both Bufab Holding and CellaVision 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 CellaVision 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 CellaVision AB, you can compare the effects of market volatilities on Bufab Holding and CellaVision 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 CellaVision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bufab Holding and CellaVision.

Diversification Opportunities for Bufab Holding and CellaVision

0.34

Correlation Coefficient

Bufab Holding  CellaVision

Weak diversification

The 3 months correlation between Bufab and CellaVision is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bufab Holding AB and CellaVision AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CellaVision 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 CellaVision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CellaVision AB has no effect on the direction of Bufab Holding i.e., Bufab Holding and CellaVision go up and down completely randomly.

Pair Corralation between Bufab Holding and CellaVision

Assuming the 90 days trading horizon Bufab Holding AB is expected to generate 0.49 times more return on investment than CellaVision. However, Bufab Holding AB is 2.05 times less risky than CellaVision. It trades about 0.21 of its potential returns per unit of risk. CellaVision AB is currently generating about 0.04 per unit of risk. If you would invest  7,611  in Bufab Holding AB on April 24, 2025 and sell it today you would earn a total of  1,711  from holding Bufab Holding AB or generate 22.48% return on investment over 90 days.

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

Bufab Holding AB  vs.  CellaVision AB

Bufab Holding AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bufab Holding AB are ranked lower than 16 (%) 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.

CellaVision AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CellaVision AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CellaVision may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Bufab Holding and CellaVision

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

The idea behind Bufab Holding AB and CellaVision 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.