Correlation Between BacTech Environmental and BluMetric Environmental

Can any of the company-specific risk be diversified away by investing in both BacTech Environmental and BluMetric 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 BacTech Environmental and BluMetric Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BacTech Environmental and BluMetric Environmental, you can compare the effects of market volatilities on BacTech Environmental and BluMetric 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 BacTech Environmental with a short position of BluMetric Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of BacTech Environmental and BluMetric Environmental.

Diversification Opportunities for BacTech Environmental and BluMetric Environmental

-0.43

Correlation Coefficient

BacTech Environmental  BluMetric Environmental

Very good diversification

The 3 months correlation between BacTech and BluMetric is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding BacTech Environmental and BluMetric Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BluMetric Environmental and BacTech Environmental 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 BacTech Environmental are associated (or correlated) with BluMetric Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BluMetric Environmental has no effect on the direction of BacTech Environmental i.e., BacTech Environmental and BluMetric Environmental go up and down completely randomly.

Pair Corralation between BacTech Environmental and BluMetric Environmental

Assuming the 90 days horizon BacTech Environmental is expected to generate 4.49 times less return on investment than BluMetric Environmental. In addition to that, BacTech Environmental is 1.73 times more volatile than BluMetric Environmental. It trades about 0.02 of its total potential returns per unit of risk. BluMetric Environmental is currently generating about 0.16 per unit of volatility. If you would invest  34.00  in BluMetric Environmental on September 4, 2024 and sell it today you would earn a total of  25.00  from holding BluMetric Environmental or generate 73.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BacTech Environmental  vs.  BluMetric Environmental

BacTech Environmental

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BacTech Environmental are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, BacTech Environmental reported solid returns over the last few months and may actually be approaching a breakup point.

BluMetric Environmental

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BluMetric Environmental are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BluMetric Environmental reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BacTech Environmental and BluMetric Environmental

The main advantage of trading using opposite BacTech Environmental and BluMetric Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BacTech Environmental position performs unexpectedly, BluMetric 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 BluMetric Environmental will offset losses from the drop in BluMetric Environmental's long position.

The idea behind BacTech Environmental and BluMetric 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.