Correlation Between Bri Chem and PyroGenesis Canada

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

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

Diversification Opportunities for Bri Chem and PyroGenesis Canada

-0.53

Correlation Coefficient

Bri Chem  PyroGenesis Canada

Excellent diversification

The 3 months correlation between Bri and PyroGenesis is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bri Chem Corp and PyroGenesis Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PyroGenesis Canada and Bri Chem 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 Bri Chem Corp are associated (or correlated) with PyroGenesis Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PyroGenesis Canada has no effect on the direction of Bri Chem i.e., Bri Chem and PyroGenesis Canada go up and down completely randomly.

Pair Corralation between Bri Chem and PyroGenesis Canada

Assuming the 90 days trading horizon Bri Chem Corp is expected to generate 2.0 times more return on investment than PyroGenesis Canada. However, Bri Chem is 2.0 times more volatile than PyroGenesis Canada. It trades about 0.08 of its potential returns per unit of risk. PyroGenesis Canada is currently generating about -0.17 per unit of risk. If you would invest  27.00  in Bri Chem Corp on September 29, 2024 and sell it today you would earn a total of  7.00  from holding Bri Chem Corp or generate 25.93% return on investment over 90 days.

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

Bri Chem Corp  vs.  PyroGenesis Canada

Bri Chem Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bri Chem Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Bri Chem displayed solid returns over the last few months and may actually be approaching a breakup point.

PyroGenesis Canada

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PyroGenesis Canada has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bri Chem and PyroGenesis Canada

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

The idea behind Bri Chem Corp and PyroGenesis Canada 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.