Correlation Between Bambuser and Crunchfish

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

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

Diversification Opportunities for Bambuser and Crunchfish

0.64

Correlation Coefficient

Bambuser  Crunchfish

Poor diversification

The 3 months correlation between Bambuser and Crunchfish is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bambuser AB and Crunchfish AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crunchfish AB and Bambuser 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 Bambuser AB are associated (or correlated) with Crunchfish. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crunchfish AB has no effect on the direction of Bambuser i.e., Bambuser and Crunchfish go up and down completely randomly.

Pair Corralation between Bambuser and Crunchfish

Assuming the 90 days trading horizon Bambuser is expected to generate 1.93 times less return on investment than Crunchfish. In addition to that, Bambuser is 1.7 times more volatile than Crunchfish AB. It trades about 0.08 of its total potential returns per unit of risk. Crunchfish AB is currently generating about 0.27 per unit of volatility. If you would invest  88.00  in Crunchfish AB on April 24, 2025 and sell it today you would earn a total of  335.00  from holding Crunchfish AB or generate 380.68% return on investment over 90 days.

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

Bambuser AB  vs.  Crunchfish AB

Bambuser AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bambuser AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bambuser unveiled solid returns over the last few months and may actually be approaching a breakup point.

Crunchfish AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Crunchfish AB are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Crunchfish unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bambuser and Crunchfish

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

The idea behind Bambuser AB and Crunchfish 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .