Correlation Between TOMI Environmental and Bion Environmental

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

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

Diversification Opportunities for TOMI Environmental and Bion Environmental

0.08

Correlation Coefficient

TOMI Environmental  Bion Environmental

Significant diversification

The 3 months correlation between TOMI and Bion is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding TOMI Environmental Solutions and Bion Environmental Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bion Environmental and TOMI 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 TOMI Environmental Solutions are associated (or correlated) with Bion Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bion Environmental has no effect on the direction of TOMI Environmental i.e., TOMI Environmental and Bion Environmental go up and down completely randomly.

Pair Corralation between TOMI Environmental and Bion Environmental

Given the investment horizon of 90 days TOMI Environmental Solutions is expected to under-perform the Bion Environmental. But the stock apears to be less risky and, when comparing its historical volatility, TOMI Environmental Solutions is 2.03 times less risky than Bion Environmental. The stock trades about -0.02 of its potential returns per unit of risk. The Bion Environmental Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Bion Environmental Technologies on August 31, 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	98.44%
Values	Daily Returns

TOMI Environmental Solutions  vs.  Bion Environmental Technologie

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.

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.

Pair Trading with TOMI Environmental and Bion Environmental

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

The idea behind TOMI Environmental Solutions and Bion Environmental Technologies 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.