Correlation Between Bion Environmental and Eestech

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

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

Diversification Opportunities for Bion Environmental and Eestech

-0.71

Correlation Coefficient

Bion Environmental  Eestech

Pay attention - limited upside

The 3 months correlation between Bion and Eestech is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bion Environmental Technologie and Eestech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eestech and Bion 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 Bion Environmental Technologies are associated (or correlated) with Eestech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eestech has no effect on the direction of Bion Environmental i.e., Bion Environmental and Eestech go up and down completely randomly.

Pair Corralation between Bion Environmental and Eestech

Given the investment horizon of 90 days Bion Environmental Technologies is expected to under-perform the Eestech. But the otc stock apears to be less risky and, when comparing its historical volatility, Bion Environmental Technologies is 5.86 times less risky than Eestech. The otc stock trades about -0.02 of its potential returns per unit of risk. The Eestech is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Eestech on August 31, 2024 and sell it today you would lose (9.96) from holding Eestech or give up 99.6% of portfolio value over 90 days.

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

Bion Environmental Technologie  vs.  Eestech

Bion Environmental

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bion Environmental Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, Bion Environmental unveiled solid returns over the last few months and may actually be approaching a breakup point.

Eestech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eestech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Bion Environmental and Eestech

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

The idea behind Bion Environmental Technologies and Eestech 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.