Correlation Between 374Water Common and LiqTech International

Can any of the company-specific risk be diversified away by investing in both 374Water Common and LiqTech International 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 374Water Common and LiqTech International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 374Water Common Stock and LiqTech International, you can compare the effects of market volatilities on 374Water Common and LiqTech International 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 374Water Common with a short position of LiqTech International. Check out your portfolio center. Please also check ongoing floating volatility patterns of 374Water Common and LiqTech International.

Diversification Opportunities for 374Water Common and LiqTech International

0.29

Correlation Coefficient

374Water Common  LiqTech International

Modest diversification

The 3 months correlation between 374Water and LiqTech is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding 374Water Common Stock and LiqTech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiqTech International and 374Water Common 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 374Water Common Stock are associated (or correlated) with LiqTech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LiqTech International has no effect on the direction of 374Water Common i.e., 374Water Common and LiqTech International go up and down completely randomly.

Pair Corralation between 374Water Common and LiqTech International

Given the investment horizon of 90 days 374Water Common Stock is expected to under-perform the LiqTech International. But the stock apears to be less risky and, when comparing its historical volatility, 374Water Common Stock is 1.05 times less risky than LiqTech International. The stock trades about -0.18 of its potential returns per unit of risk. The LiqTech International is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  298.00  in LiqTech International on September 19, 2024 and sell it today you would lose (115.00) from holding LiqTech International or give up 38.59% of portfolio value over 90 days.

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

374Water Common Stock  vs.  LiqTech International

374Water Common Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 374Water Common Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

LiqTech International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LiqTech International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with 374Water Common and LiqTech International

The main advantage of trading using opposite 374Water Common and LiqTech International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 374Water Common position performs unexpectedly, LiqTech International 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 LiqTech International will offset losses from the drop in LiqTech International's long position.

The idea behind 374Water Common Stock and LiqTech International 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.