Correlation Between Bawat Water and Qleanair Holding

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

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

Diversification Opportunities for Bawat Water and Qleanair Holding

0.43

Correlation Coefficient

Bawat Water  Qleanair Holding

Very weak diversification

The 3 months correlation between Bawat and Qleanair is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bawat Water Technologies and Qleanair Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qleanair Holding and Bawat Water 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 Bawat Water Technologies are associated (or correlated) with Qleanair Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qleanair Holding has no effect on the direction of Bawat Water i.e., Bawat Water and Qleanair Holding go up and down completely randomly.

Pair Corralation between Bawat Water and Qleanair Holding

Assuming the 90 days trading horizon Bawat Water Technologies is expected to generate 0.91 times more return on investment than Qleanair Holding. However, Bawat Water Technologies is 1.1 times less risky than Qleanair Holding. It trades about -0.13 of its potential returns per unit of risk. Qleanair Holding AB is currently generating about -0.18 per unit of risk. If you would invest  83.00  in Bawat Water Technologies on December 1, 2024 and sell it today you would lose (8.00) from holding Bawat Water Technologies or give up 9.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	86.36%
Values	Daily Returns

Bawat Water Technologies  vs.  Qleanair Holding AB

Bawat Water Technologies

Risk-Adjusted Performance

Very Weak

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

Qleanair Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qleanair Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Bawat Water and Qleanair Holding

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

The idea behind Bawat Water Technologies and Qleanair Holding AB 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.