Correlation Between Bion Environmental and TOMI Environmental

Can any of the company-specific risk be diversified away by investing in both Bion Environmental and TOMI 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 Bion Environmental and TOMI Environmental 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 TOMI Environmental Solutions, you can compare the effects of market volatilities on Bion Environmental and TOMI 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 Bion Environmental with a short position of TOMI Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bion Environmental and TOMI Environmental.

Diversification Opportunities for Bion Environmental and TOMI Environmental

0.13

Correlation Coefficient

Bion Environmental  TOMI Environmental

Average diversification

The 3 months correlation between Bion and TOMI is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Bion Environmental Technologie and TOMI Environmental Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOMI Environmental 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 TOMI Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOMI Environmental has no effect on the direction of Bion Environmental i.e., Bion Environmental and TOMI Environmental go up and down completely randomly.

Pair Corralation between Bion Environmental and TOMI Environmental

Given the investment horizon of 90 days Bion Environmental Technologies is expected to generate 2.01 times more return on investment than TOMI Environmental. However, Bion Environmental is 2.01 times more volatile than TOMI Environmental Solutions. It trades about 0.04 of its potential returns per unit of risk. TOMI Environmental Solutions is currently generating about -0.02 per unit of risk. If you would invest  22.00  in Bion Environmental Technologies on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Bion Environmental Technologies or generate 0.0% return on investment over 90 days.

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

Bion Environmental Technologie  vs.  TOMI Environmental Solutions

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.

TOMI Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOMI Environmental Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, TOMI Environmental is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bion Environmental and TOMI Environmental

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

The idea behind Bion Environmental Technologies and TOMI Environmental Solutions 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.