Correlation Between Loft II and Baumer SA

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

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

Diversification Opportunities for Loft II and Baumer SA

0.69

Correlation Coefficient

Loft II  Baumer SA

Poor diversification

The 3 months correlation between Loft and Baumer is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Loft II Fundo and Baumer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baumer SA and Loft II 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 Loft II Fundo are associated (or correlated) with Baumer SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baumer SA has no effect on the direction of Loft II i.e., Loft II and Baumer SA go up and down completely randomly.

Pair Corralation between Loft II and Baumer SA

Assuming the 90 days trading horizon Loft II Fundo is expected to generate 3.78 times more return on investment than Baumer SA. However, Loft II is 3.78 times more volatile than Baumer SA. It trades about 0.14 of its potential returns per unit of risk. Baumer SA is currently generating about 0.14 per unit of risk. If you would invest  351.00  in Loft II Fundo on April 21, 2025 and sell it today you would earn a total of  233.00  from holding Loft II Fundo or generate 66.38% return on investment over 90 days.

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

Loft II Fundo  vs.  Baumer SA

Loft II Fundo

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Loft II Fundo are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Loft II sustained solid returns over the last few months and may actually be approaching a breakup point.

Baumer SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baumer SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Baumer SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Loft II and Baumer SA

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

The idea behind Loft II Fundo and Baumer SA 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..