Correlation Between Arq and American Environmental

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

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

Diversification Opportunities for Arq and American Environmental

0.0

Correlation Coefficient

Arq  American Environmental

Pay attention - limited upside

The 3 months correlation between Arq and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arq Inc and American Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Environmental and Arq 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 Arq Inc are associated (or correlated) with American Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Environmental has no effect on the direction of Arq i.e., Arq and American Environmental go up and down completely randomly.

Pair Corralation between Arq and American Environmental

If you would invest  661.00  in Arq Inc on October 24, 2024 and sell it today you would earn a total of  8.00  from holding Arq Inc or generate 1.21% return on investment over 90 days.

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

Arq Inc  vs.  American Environmental

Arq Inc

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arq Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Arq reported solid returns over the last few months and may actually be approaching a breakup point.

American Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, American Environmental is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Arq and American Environmental

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

The idea behind Arq Inc and American Environmental 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.