Correlation Between Birchtech Corp and Madison Pacific

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

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

Diversification Opportunities for Birchtech Corp and Madison Pacific

-0.16

Correlation Coefficient

Birchtech Corp  Madison Pacific

Good diversification

The 3 months correlation between Birchtech and Madison is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Birchtech Corp and Madison Pacific Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Pacific Prop and Birchtech Corp 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 Birchtech Corp are associated (or correlated) with Madison Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Pacific Prop has no effect on the direction of Birchtech Corp i.e., Birchtech Corp and Madison Pacific go up and down completely randomly.

Pair Corralation between Birchtech Corp and Madison Pacific

Assuming the 90 days trading horizon Birchtech Corp is expected to under-perform the Madison Pacific. In addition to that, Birchtech Corp is 2.58 times more volatile than Madison Pacific Properties. It trades about -0.08 of its total potential returns per unit of risk. Madison Pacific Properties is currently generating about -0.14 per unit of volatility. If you would invest  500.00  in Madison Pacific Properties on October 20, 2024 and sell it today you would lose (75.00) from holding Madison Pacific Properties or give up 15.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	79.37%
Values	Daily Returns

Birchtech Corp  vs.  Madison Pacific Properties

Birchtech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Birchtech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Madison Pacific Prop

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Birchtech Corp and Madison Pacific

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

The idea behind Birchtech Corp and Madison Pacific Properties 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .