Correlation Between Energy and LiqTech International
Can any of the company-specific risk be diversified away by investing in both Energy 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 Energy and LiqTech International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy and Water and LiqTech International, you can compare the effects of market volatilities on Energy 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 Energy with a short position of LiqTech International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy and LiqTech International.
Diversification Opportunities for Energy and LiqTech International
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Energy and LiqTech is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Energy and Water and LiqTech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiqTech International and Energy 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 Energy and Water 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 Energy i.e., Energy and LiqTech International go up and down completely randomly.
Pair Corralation between Energy and LiqTech International
Given the investment horizon of 90 days Energy and Water is expected to under-perform the LiqTech International. In addition to that, Energy is 2.14 times more volatile than LiqTech International. It trades about -0.21 of its total potential returns per unit of risk. LiqTech International is currently generating about -0.08 per unit of volatility. If you would invest 199.00 in LiqTech International on August 26, 2024 and sell it today you would lose (32.00) from holding LiqTech International or give up 16.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy and Water vs. LiqTech International
Performance |
| Timeline |
| Energy and Water |
| LiqTech International |
Energy and LiqTech International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy and LiqTech International
The main advantage of trading using opposite Energy and LiqTech International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy 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.| Energy vs. TOMI Environmental Solutions | Energy vs. Zurn Elkay Water | Energy vs. Federal Signal | Energy vs. Energy Recovery |
| LiqTech International vs. Federal Signal | LiqTech International vs. Zurn Elkay Water | LiqTech International vs. Fuel Tech | LiqTech International vs. 374Water Common Stock |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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