Correlation Between BacTech Environmental and EcoPlus
Can any of the company-specific risk be diversified away by investing in both BacTech Environmental and EcoPlus 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 BacTech Environmental and EcoPlus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BacTech Environmental and EcoPlus, you can compare the effects of market volatilities on BacTech Environmental and EcoPlus 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 BacTech Environmental with a short position of EcoPlus. Check out your portfolio center. Please also check ongoing floating volatility patterns of BacTech Environmental and EcoPlus.
Diversification Opportunities for BacTech Environmental and EcoPlus
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BacTech and EcoPlus is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding BacTech Environmental and EcoPlus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EcoPlus and BacTech Environmental 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 BacTech Environmental are associated (or correlated) with EcoPlus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EcoPlus has no effect on the direction of BacTech Environmental i.e., BacTech Environmental and EcoPlus go up and down completely randomly.
Pair Corralation between BacTech Environmental and EcoPlus
Assuming the 90 days horizon BacTech Environmental is expected to generate 10.44 times less return on investment than EcoPlus. But when comparing it to its historical volatility, BacTech Environmental is 2.56 times less risky than EcoPlus. It trades about 0.03 of its potential returns per unit of risk. EcoPlus is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1.42 in EcoPlus on November 3, 2024 and sell it today you would earn a total of 1.03 from holding EcoPlus or generate 72.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
BacTech Environmental vs. EcoPlus
Performance |
| Timeline |
| BacTech Environmental |
| EcoPlus |
BacTech Environmental and EcoPlus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BacTech Environmental and EcoPlus
The main advantage of trading using opposite BacTech Environmental and EcoPlus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BacTech Environmental position performs unexpectedly, EcoPlus 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 EcoPlus will offset losses from the drop in EcoPlus' long position.| BacTech Environmental vs. Agilyx AS | BacTech Environmental vs. EcoPlus | BacTech Environmental vs. BQE Water | BacTech Environmental vs. LiCycle Holdings Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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