Correlation Between Anaergia and BQE Water

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

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

Diversification Opportunities for Anaergia and BQE Water

0.05

Correlation Coefficient

Anaergia  BQE Water

Significant diversification

The 3 months correlation between Anaergia and BQE is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Anaergia and BQE Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BQE Water and Anaergia 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 Anaergia are associated (or correlated) with BQE Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BQE Water has no effect on the direction of Anaergia i.e., Anaergia and BQE Water go up and down completely randomly.

Pair Corralation between Anaergia and BQE Water

Assuming the 90 days horizon Anaergia is expected to generate 3.69 times more return on investment than BQE Water. However, Anaergia is 3.69 times more volatile than BQE Water. It trades about 0.06 of its potential returns per unit of risk. BQE Water is currently generating about 0.07 per unit of risk. If you would invest  68.00  in Anaergia on November 28, 2024 and sell it today you would earn a total of  7.00  from holding Anaergia or generate 10.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.06%
Values	Daily Returns

Anaergia  vs.  BQE Water

Anaergia

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Anaergia are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Anaergia reported solid returns over the last few months and may actually be approaching a breakup point.

BQE Water

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BQE Water are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, BQE Water may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Anaergia and BQE Water

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

The idea behind Anaergia and BQE Water 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.