Correlation Between EcoPlus and BacTech Environmental
Can any of the company-specific risk be diversified away by investing in both EcoPlus and BacTech Environmental 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 EcoPlus and BacTech Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EcoPlus and BacTech Environmental, you can compare the effects of market volatilities on EcoPlus and BacTech Environmental 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 EcoPlus with a short position of BacTech Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of EcoPlus and BacTech Environmental.
Diversification Opportunities for EcoPlus and BacTech Environmental
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between EcoPlus and BacTech is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding EcoPlus and BacTech Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BacTech Environmental and EcoPlus 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 EcoPlus are associated (or correlated) with BacTech Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BacTech Environmental has no effect on the direction of EcoPlus i.e., EcoPlus and BacTech Environmental go up and down completely randomly.
Pair Corralation between EcoPlus and BacTech Environmental
Given the investment horizon of 90 days EcoPlus is expected to generate 2.56 times more return on investment than BacTech Environmental. However, EcoPlus is 2.56 times more volatile than BacTech Environmental. It trades about 0.1 of its potential returns per unit of risk. BacTech Environmental is currently generating about 0.03 per unit of risk. 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 |
EcoPlus vs. BacTech Environmental
Performance |
| Timeline |
| EcoPlus |
| BacTech Environmental |
EcoPlus and BacTech Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EcoPlus and BacTech Environmental
The main advantage of trading using opposite EcoPlus and BacTech Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EcoPlus position performs unexpectedly, BacTech Environmental 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 BacTech Environmental will offset losses from the drop in BacTech Environmental's long position.The idea behind EcoPlus and BacTech Environmental 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.| 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 Stocks Directory module to find actively traded stocks across global markets.
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