Correlation Between Fuel Tech and LiqTech International
Can any of the company-specific risk be diversified away by investing in both Fuel 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 Fuel 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 Fuel Tech and LiqTech International, you can compare the effects of market volatilities on Fuel 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 Fuel Tech with a short position of LiqTech International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuel Tech and LiqTech International.
Diversification Opportunities for Fuel Tech and LiqTech International
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fuel and LiqTech is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fuel Tech and LiqTech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiqTech International and Fuel 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 Fuel Tech 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 Fuel Tech i.e., Fuel Tech and LiqTech International go up and down completely randomly.
Pair Corralation between Fuel Tech and LiqTech International
Given the investment horizon of 90 days Fuel Tech is expected to generate 0.46 times more return on investment than LiqTech International. However, Fuel Tech is 2.19 times less risky than LiqTech International. It trades about 0.09 of its potential returns per unit of risk. LiqTech International is currently generating about 0.01 per unit of risk. If you would invest 103.00 in Fuel Tech on August 30, 2024 and sell it today you would earn a total of 5.00 from holding Fuel Tech or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fuel Tech vs. LiqTech International
Performance |
| Timeline |
| Fuel Tech |
| LiqTech International |
Fuel Tech and LiqTech International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fuel Tech and LiqTech International
The main advantage of trading using opposite Fuel Tech and LiqTech International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuel 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.| Fuel Tech vs. Federal Signal | Fuel Tech vs. CECO Environmental Corp | Fuel Tech vs. Zurn Elkay Water | Fuel Tech vs. Greenlane Renewables |
| LiqTech International vs. China Natural Resources | LiqTech International vs. Seychelle Environmtl | LiqTech International vs. Vow ASA | LiqTech International vs. Eestech |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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