Correlation Between Dios Fastigheter and Bufab Holding

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

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

Diversification Opportunities for Dios Fastigheter and Bufab Holding

0.46

Correlation Coefficient

Dios Fastigheter  Bufab Holding

Very weak diversification

The 3 months correlation between Dios and Bufab is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dios Fastigheter AB and Bufab Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bufab Holding AB and Dios Fastigheter 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 Dios Fastigheter AB are associated (or correlated) with Bufab Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bufab Holding AB has no effect on the direction of Dios Fastigheter i.e., Dios Fastigheter and Bufab Holding go up and down completely randomly.

Pair Corralation between Dios Fastigheter and Bufab Holding

Assuming the 90 days trading horizon Dios Fastigheter is expected to generate 9.83 times less return on investment than Bufab Holding. But when comparing it to its historical volatility, Dios Fastigheter AB is 1.41 times less risky than Bufab Holding. It trades about 0.03 of its potential returns per unit of risk. Bufab Holding AB is currently generating about 0.21 of returns per unit of risk over similar time horizon. 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	Weak
Accuracy	98.36%
Values	Daily Returns

Dios Fastigheter AB  vs.  Bufab Holding AB

Dios Fastigheter

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dios Fastigheter AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Dios Fastigheter is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Dios Fastigheter and Bufab Holding

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

The idea behind Dios Fastigheter AB and Bufab Holding 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.