Correlation Between LiqTech International and Bion Environmental
Can any of the company-specific risk be diversified away by investing in both LiqTech International and Bion 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 LiqTech International and Bion Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LiqTech International and Bion Environmental Technologies, you can compare the effects of market volatilities on LiqTech International and Bion 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 LiqTech International with a short position of Bion Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of LiqTech International and Bion Environmental.
Diversification Opportunities for LiqTech International and Bion Environmental
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LiqTech and Bion is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding LiqTech International and Bion Environmental Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bion Environmental and LiqTech International 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 LiqTech International are associated (or correlated) with Bion Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bion Environmental has no effect on the direction of LiqTech International i.e., LiqTech International and Bion Environmental go up and down completely randomly.
Pair Corralation between LiqTech International and Bion Environmental
Given the investment horizon of 90 days LiqTech International is expected to generate 0.8 times more return on investment than Bion Environmental. However, LiqTech International is 1.25 times less risky than Bion Environmental. It trades about 0.01 of its potential returns per unit of risk. Bion Environmental Technologies is currently generating about -0.08 per unit of risk. If you would invest 180.00 in LiqTech International on August 30, 2024 and sell it today you would lose (5.00) from holding LiqTech International or give up 2.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LiqTech International vs. Bion Environmental Technologie
Performance |
| Timeline |
| LiqTech International |
| Bion Environmental |
LiqTech International and Bion Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LiqTech International and Bion Environmental
The main advantage of trading using opposite LiqTech International and Bion Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LiqTech International position performs unexpectedly, Bion 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 Bion Environmental will offset losses from the drop in Bion Environmental's long position.| LiqTech International vs. China Natural Resources | LiqTech International vs. Seychelle Environmtl | LiqTech International vs. Vow ASA | LiqTech International vs. Eestech |
| Bion Environmental vs. Seychelle Environmtl | Bion Environmental vs. Eestech | Bion Environmental vs. Energy and Water | Bion Environmental vs. One World Universe |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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