Correlation Between Arq and Euro Tech
Can any of the company-specific risk be diversified away by investing in both Arq and Euro Tech 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 Arq and Euro Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arq Inc and Euro Tech Holdings, you can compare the effects of market volatilities on Arq and Euro Tech 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 Arq with a short position of Euro Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arq and Euro Tech.
Diversification Opportunities for Arq and Euro Tech
Excellent diversification
The 3 months correlation between Arq and Euro is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Arq Inc and Euro Tech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euro Tech Holdings and Arq 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 Arq Inc are associated (or correlated) with Euro Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euro Tech Holdings has no effect on the direction of Arq i.e., Arq and Euro Tech go up and down completely randomly.
Pair Corralation between Arq and Euro Tech
Considering the 90-day investment horizon Arq Inc is expected to generate 1.97 times more return on investment than Euro Tech. However, Arq is 1.97 times more volatile than Euro Tech Holdings. It trades about 0.35 of its potential returns per unit of risk. Euro Tech Holdings is currently generating about -0.2 per unit of risk. If you would invest 593.00 in Arq Inc on August 26, 2024 and sell it today you would earn a total of 193.00 from holding Arq Inc or generate 32.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arq Inc vs. Euro Tech Holdings
Performance |
| Timeline |
| Arq Inc |
| Euro Tech Holdings |
Arq and Euro Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arq and Euro Tech
The main advantage of trading using opposite Arq and Euro Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arq position performs unexpectedly, Euro Tech 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 Euro Tech will offset losses from the drop in Euro Tech's long position.| Arq vs. Energy Recovery | Arq vs. Federal Signal | Arq vs. Purecycle Technologies Holdings | Arq vs. Zurn Elkay Water |
| Euro Tech vs. LiqTech International | Euro Tech vs. TOMI Environmental Solutions | Euro Tech vs. ClearSign Combustion | Euro Tech vs. Vow ASA |
Check out your portfolio center.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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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