Correlation Between Euro Tech and LiqTech International
Can any of the company-specific risk be diversified away by investing in both Euro Tech and LiqTech International 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 Euro Tech and LiqTech International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Euro Tech Holdings and LiqTech International, you can compare the effects of market volatilities on Euro Tech and LiqTech International 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 Euro Tech with a short position of LiqTech International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euro Tech and LiqTech International.
Diversification Opportunities for Euro Tech and LiqTech International
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Euro and LiqTech is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Euro Tech Holdings and LiqTech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiqTech International and Euro Tech 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 Euro Tech Holdings are associated (or correlated) with LiqTech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LiqTech International has no effect on the direction of Euro Tech i.e., Euro Tech and LiqTech International go up and down completely randomly.
Pair Corralation between Euro Tech and LiqTech International
Given the investment horizon of 90 days Euro Tech Holdings is expected to under-perform the LiqTech International. But the stock apears to be less risky and, when comparing its historical volatility, Euro Tech Holdings is 1.7 times less risky than LiqTech International. The stock trades about -0.19 of its potential returns per unit of risk. The LiqTech International is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 165.00 in LiqTech International on October 23, 2024 and sell it today you would earn a total of 16.00 from holding LiqTech International or generate 9.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Euro Tech Holdings vs. LiqTech International
Performance |
Timeline |
Euro Tech Holdings |
LiqTech International |
Euro Tech and LiqTech International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Euro Tech and LiqTech International
The main advantage of trading using opposite Euro Tech and LiqTech International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euro Tech position performs unexpectedly, LiqTech International 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 LiqTech International will offset losses from the drop in LiqTech International's long position.Euro Tech vs. LiqTech International | Euro Tech vs. TOMI Environmental Solutions | Euro Tech vs. ClearSign Combustion | Euro Tech vs. Vow ASA |
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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 Stocks Directory module to find actively traded stocks across global markets.
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